Refer to the Information Below Which Shows the Demand Deposits

question 12

Multiple Choice

Refer to the information below which shows the demand deposits and actual reserves of a banking system. When the desired reserve ratio is 20 percent, the money creating potential of the entire banking system is:

• A) $4,000.
• B) $6,000.
• C) $8,000.
• D) $10,000.

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Definitions:

Alpha

A threshold value used in hypothesis testing that defines the probability of making a Type I error, or rejecting a true null hypothesis.

Critical Value

A threshold in statistical testing that defines the boundary for rejecting the null hypothesis.

Hypotheses

A formulated assumption made based on limited evidence as a starting point for further investigation.

Alpha

In statistics, it often refers to the level of significance at which a hypothesis test is conducted; commonly set at 0.05.