Assume There Is No Leakage from the Banking System and That

question 334

Multiple Choice

Assume there is no leakage from the banking system and that all commercial banks are loaned up. The required reserve ratio is 10%. If the Fed buys $10 million worth of government securities from the public, the change in the money supply will be

• A) $1 million.
• B) $10 million.
• C) $100 million.
• D) $110 million.

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Definitions:

Legislative Authority

The power vested in a legislative body to enact laws, amend them, and repeal them.

Moratorium

A temporary prohibition or suspension of an activity or law, often used during emergencies or when deemed necessary for public welfare.

Administrative Law

The collection of rules and decisions made by administrative agencies to fill in particular details missing from constitutions and statutes.

Decision-making

The process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.