The Banking System Currently Has $50 Billion of Reserves,none of Which

question 111

Multiple Choice

The banking system currently has $50 billion of reserves,none of which are excess.People hold only deposits and no currency,and the reserve requirement is 10 percent.If the Fed raises the reserve requirement to 12.5 percent and at the same time sells $10 billion worth of bonds,then by how much does the money supply change?

• A)It falls by $20 billion.
• B)It falls by $110 billion.
• C)It falls by $180 billion.
• D)None of the above is correct.

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Definitions:

Distinct Personalities

Refers to the presence of two or more distinct and relatively enduring personality states within a single individual, often related to dissociative identity disorder.

One Body

a concept that could refer to a unified or holistic approach to something, emphasizing the integration or unity of parts.

Personality Disorders

Disorders in which a person adopts a persistent, rigid, and maladaptive pattern of behavior that interferes with normal social interactions.

Maladaptive Pattern

Behavior patterns that negatively affect a person’s ability to function in daily life.