Under fractional reserve banking system, banks
A. hold more reserves than deposits.
B. generally lend out majority of the funds deposited.
C. cause the money supply to fall by lending out reserves.
D. None of the above is correct.
Answer: B
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A) selling; short B) buying; long C) buying; short D) selling; long
At the utility maximizing level, the price of a shirt is $15 and the price of a trouser is $12 . At this level, the marginal utility derived from the shirt is 30 utils and the marginal utility derived from the trouser is _____
a. 24 utils b. 30 utils c. 25 utils d. 22 utils
Suppose a banking system has a required reserve ratio of 10 percent. What is the maximum possible increase in the money supply in response to a $2 billion increase in excess reserves for the whole banking system?
A. $20 billion. B. $210 billion. C. $2 billion. D. $200 million.
Sources of market failure include
A. competitive behavior. B. unequal income distribution. C. externalities. D. private goods.