Use the Following to Answer Questions

question 156

Multiple Choice

Use the following to answer questions :
Scenario: Money Supply Changes II
Charlotte withdraws $8,000 from her checkable bank deposit to pay tuition this semester. Assume that the reserve requirement is 20% and that banks do not hold excess reserves.
-(Scenario: Money Supply Changes II) Look at the scenario Money Supply Changes II. As a result of the withdrawal, excess reserves _____ by _____.

• A)increase; $8,000
• B)decrease; $8,000
• C)decrease; $6,400
• D)decrease; $1,600

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Definitions:

Exported Good

A product manufactured in one country but shipped and sold abroad, contributing to a country's foreign trade balance.

Government Tax Revenue

Funds collected by the government from taxes imposed on individuals and businesses, used to fund public services and infrastructure.

Domestic Price

The price at which goods and services are sold within a country’s borders, influenced by local demand and supply conditions.

Tariff

A tariff is a tax imposed by a government on imported or exported goods, often used to protect domestic industries or generate revenue.