If Currency Held by the Public Equals $100 Billion, Reserves

question 87

Multiple Choice

If currency held by the public equals $100 billion, reserves held by banks equal $50 billion, and bank deposits equal $500 billion, then the money supply equals:

• A) $100 billion.
• B) $150 billion.
• C) $600 billion.
• D) $650 billion.

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Definitions:

Optimal Solution

The best possible outcome or decision that maximizes or minimizes a specific objective, derived through analytical methods or mathematical optimization.

Feasible Region

In optimization problems, the set of all possible points that satisfy the problem's constraints, within which the optimal solution lies.

Valid Constraints

Restrictions or conditions in a mathematical model or optimization problem that are necessary for the formulation to accurately represent the real-world problem it seeks to solve.

Linear Programming

A mathematical technique used to find the optimal solution within a mathematical model that has linear relationships.