Assume There Is No Leakage from the Banking System and That

question 354

Multiple Choice

Assume there is no leakage from the banking system and that all commercial banks are loaned up. The required reserve ratio is 16%. If the Fed sells $5 million worth of government securities to the public, the change in the money supply will be

• A) -$31.25 million.
• B) -$21 million.
• C) -$16 million.
• D) -$11.75 million.

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Definitions:

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Refers to the communities throughout the world that are descended from the historic movement of peoples from Africa, predominantly to the Americas, Europe, Asia, and the Middle East, through the transatlantic slave trade, migration, and other means.

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A period marked by heightened fear and suspicion of communist influence on society, often leading to irrational accusations and violations of civil liberties.

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A U.S. Senator known for his campaign against alleged communists in the government and military during the early 1950s, a period known as the McCarthy era.

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A political party in the United States that advocates for a Marxist-Leninist form of government and socialism, established in 1919.