A Bank Which Must Hold 100 Percent Reserves Opens in an Economy

question 25

Multiple Choice

A bank which must hold 100 percent reserves opens in an economy that had no banks and a currency of $150. If customers deposit $50 into the bank, what is the value of the money supply?

• A)$50
• B)$100
• C)$150
• D)$200

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Definitions:

Storage

The retention of encoded information over time.

Encoding

The process of converting information into a form that can be stored in memory, involving the initial reception and processing of stimuli.

Retention

The ability to preserve and recall information or experiences over time.

Effortful Processing

A type of information processing that requires attention and conscious effort to encode or transform information.