Use the Following Example to Answer the Following Questions

question 123

Multiple Choice

Use the following example to answer the following questions:
Imagine that Stella deposits $25,000 in currency (which she had been storing in her closet) into her checking account at the bank.Assume that this institution has a required reserve ratio of 25 percent.
-As a result of this deposit,what is the maximum amount in loans that can be made by all the banks in the banking system?

• A) $0
• B) $18,750
• C) $25,000
• D) $31,250
• E) $100,000

---

Definitions:

Level of Significance

The probability of rejecting the null hypothesis in a statistical test when it is true, often denoted by alpha.

One-tailed

Describes tests or confidence intervals that focus on one direction of effect or relationship, either greater than or less than a certain value.

Null Hypothesis

A statement in hypothesis testing that assumes no significant difference or effect exists between certain populations or variables.

Level of Significance

In hypothesis testing, the threshold below which the null hypothesis is rejected, often denoted by alpha.