Table 29-7. -Refer to Table 29-7. Assume the Fed's Reserve Requirement Is

question 130

Multiple Choice

Table 29-7.
-Refer to Table 29-7. Assume the Fed's reserve requirement is 10 percent and that the Bank of Springfield makes new loans so as to make its new reserve ratio 10 percent. From then on, no bank holds any excess reserves. Assume also that people hold only deposits and no currency. Then by what amount does the economy's money supply increase?

• A)$37,800
• B)$18,000
• C)$2,000
• D)$16,300

---

Definitions:

Coercive Power

The ability to control others through the threat of punishment or the actual infliction of unpleasantness.

Agentic State

A psychological condition in which an individual defers to authority and acts on the orders of that authority, even against their own conscience.

Autonomy

The capacity to make an informed, uncoerced decision; in social contexts, it refers to the self-governance or independence of individuals or groups.

Higher Authority's Orders

Directives issued by individuals or bodies in higher positions of power or hierarchy, which are expected to be followed by those at lower levels.