Suppose That the Required Reserve Ratio Is 0

question 216

Multiple Choice

Suppose that the required reserve ratio is 0.2,and the Fed buys $5,000 of U.S.government securities from Bank A,which lends $4,000 and keeps $1,000 in its vault in cash.In this round of the money-creation process,the money supply,as measured by M1,has increased by

• A)$1,000
• B)$4,000
• C)$5,000
• D)$10,000
• E)$3,000

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Definitions:

Vehicle Retarder

Auxiliary braking device used to supplement the service brakes; in most cases these convert chassis kinetic energy into hydraulic or electrical energy and are located in the driveline. Distinct from engine or transmission retarders.

Kingpin Lock

A security device that locks the kingpin of a semi-trailer to prevent unauthorized coupling or theft of the trailer.

Drive Axle

The axle specifically responsible for transmitting power from the transmission to the wheels, propelling the vehicle forward or backward.

Truck Configurations

The specific arrangement or setup of parts and systems on a truck designed for particular purposes.