Assume There Are No Excess Reserves in the Banking System

question 72

Multiple Choice

Assume there are no excess reserves in the banking system when the reserve requirement is 20%.The purchase by the Fed of $10,000 in U.S.government securities from Academy National Bank has the potential of ultimately increasing the money supply by a total of

• A)$2,000
• B)$8,000
• C)$10,000
• D)$20,000
• E)$50,000

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Definitions:

Americans

Individuals or citizens of the United States of America, referring also to aspects of their culture and society.

Heart Disease

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Tumor Cells

Abnormal cells that divide uncontrollably and have the potential to invade and spread to other parts of the body.

Inescapable Shocks

Refers to a situation where an individual or animal is subjected to shocks from which they cannot escape, often used in stress research.