Assume First Central Bank Has a Desired Reserve Ratio of 15

question 132

Multiple Choice

Assume First Central Bank has a desired reserve ratio of 15 percent;$80,000 in total deposits,loans equal to $60,000,and has $20,000 in actual reserves.First Central can make additional loans totaling

• A)$8,000.
• B)$12,000.
• C)$20,000.
• D)$60,000.
• E)$80,000.

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Definitions:

Q

Output, or number of goods and services produced during the current year.

Inflationary Recessions

Economic periods characterized by slowing growth (recession) coupled with rising prices (inflation), presenting a challenging scenario for policy makers.

Monetary Policy

The process by which a country's central bank or monetary authority controls the supply of money, often targeting an inflation rate or interest rate to ensure economic stability.

Fiscal Policy

Government policies regarding taxation and spending to influence the economy, aimed at controlling inflation, reducing unemployment, and fostering economic growth.