Suppose the Required Reserve Ratio Is 0

question 13

Multiple Choice

Suppose the required reserve ratio is 0.2 and the Fed buys $100,000 in government securities from Big Bank.How much money can the commercial banking system create?

• A)$1,000,000
• B)$500,000
• C)$100,000
• D)$80,000
• E)none

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Definitions:

Helicopter Parents

Parents who take an overly involved or intrusive interest in the lives of their children, often attempting to micromanage their affairs.

Micromanaging

A management style where a supervisor closely observes or controls the work of subordinates or employees, often excessively.

Boomerang Children

Adults who return to live in their parent's home after a period of independence, often due to economic reasons.

Middle-Class Lifestyle

A standard of living typically associated with the middle class that includes a comfortable level of income, security, and amenities.