If the Reserve Ratio Is 4 Percent,then $81,250 of New

question 26

Multiple Choice

If the reserve ratio is 4 percent,then $81,250 of new money can be generated by

• A)$325 of new reserves.
• B)$3,250 of new reserves.
• C)$20,312.50 of new reserves.
• D)$2,031,250 of new reserves.

---

Definitions:

Equilibrium

A state in economics where demand equals supply, resulting in a stable market price and quantity.

Take Home Pay

The amount of income left after deductions such as taxes and retirement contributions are taken out of an individual's gross salary.

Labor Cost

The total expenditure faced by employers for the wages, benefits, and taxes associated with employing labor.

Tax Burden

The economic impact of taxation on an individual or entity, often expressed as the total amount of tax paid divided by the total income.