If $500 of New Reserves Generates $1000 of New Money

question 6

Multiple Choice

If $500 of new reserves generates $1000 of new money in the economy,then the money multiplier is

• A)2 and the reserve ratio is 50 percent.
• B)​2 and the reserve ratio is 2 percent.
• C)​0.5 and the reserve ratio is 50 percent.
• D)​0.5 and the reserve ratio is 2 percent.

---

Definitions:

Pectoralis Major

A large muscle in the upper chest that helps with the movement of the shoulder and arm.

Rectus Abdominis

The rectus abdominis is a long muscle that runs vertically on each side of the anterior wall of the human abdomen, primarily responsible for flexing the lumbar spine and helping to compress abdominal contents.

Tongue

A muscular organ in the mouth of most vertebrates that manipulates food for mastication and is used in the act of swallowing.

Palate

The roof of the mouth in humans and vertebrates, separating the oral cavity from the nasal cavity and consisting of the hard and soft palate.