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Suppose the Required Reserve Ratio Is 10% and a Depositor

question 26

Multiple Choice

Suppose the required reserve ratio is 10% and a depositor withdraws $500 from her checkable deposit. The money supply will _____ if the banking system does NOT hold any excess reserves.


Definitions:

Retroactive Interference

A phenomenon where new information interferes with the ability to recall old information.

Transience

The quality or state of being transient; temporary, short-lived, or ephemeral in nature.

Neurons

Specialized cells within the nervous system that transmit information to other nerve cells, muscle, or gland cells.

Mnemonic

A learning technique that aids in the recall of information by associating complex information with simple, memorable cues.

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