If the Reserve Ratio Is 5 Percent,banks Do Not Hold

question 71

Multiple Choice

If the reserve ratio is 5 percent,banks do not hold excess reserves,and people do not hold currency,then when the Fed purchases $20 million worth of government bonds,bank reserves

• A)increase by $20 million and the money supply eventually increases by $400 million.
• B)decrease by $20 million and the money supply eventually decreases by $400 million.
• C)increase by $20 million and the money supply eventually increases by $100 million.
• D)decrease by $20 million and the money supply eventually decreases by $100 million.

---

Definitions:

Law Journal

A scholarly publication focusing on legal issues, case studies, and commentary on legislative developments.

Publicly Filed Document

A document that has been officially submitted to a public office or government agency and is available for public viewing.

Primary Source

Original documents, recordings, or other sources of information that have not been altered and provide direct evidence or first-hand testimony about an event, subject, or period.

Securities And Exchange Commission

A federal agency responsible for regulating the securities industry, enforcing federal securities laws, and overseeing the stock and options exchanges in the United States.