The Fed Changes Reserve Requirements from 10% to 7%, Thereby

question 4

Multiple Choice

The Fed changes reserve requirements from 10% to 7%, thereby creating $900 million in excess reserves. The total change in deposits (with no drains) would be

• A) $3,000 million.
• B) $15,625 million.
• C) $12,857 million.
• D) $3,795 million.
• E) none of the above. (1/0.07)  $900 million

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Definitions:

Critical Value

A point on a statistical distribution that represents a threshold beyond which a given effect is considered statistically significant.

Normally Distributed

Describes a type of continuous probability distribution for a real-valued random variable where observations in a dataset are symmetrically distributed around the mean.

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A statistical assumption that the variance within each of a set of groups is the same across all groups.

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Complex formulations designed to alleviate or manage the pain associated with arthritis.