The Fed Changes Reserve Requirements from 10% to 14%, Thereby

question 46

Multiple Choice

The Fed changes reserve requirements from 10% to 14%, thereby eliminating $750 million in excess reserves. The total change in deposits (with no drains) would be (rounded)

• A) $7.917 billion.
• B) $6.630 billion.
• C) $5.357 billion.
• D) $4.934 billion.
• E) none of the above. (1/0.14)  $750 million

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Definitions:

Bundle

In economics, a combination of various goods and services that a consumer might consider purchasing.

Constants

Fixed values in mathematical equations or models that do not change under different conditions.

Indifference Curves

Graphical representations showing combinations of two goods among which a consumer is indifferent, reflecting their preferences.

Avocados

Edible, pear-shaped fruits with a rich, creamy texture, often used in various cuisines worldwide.