A bank currently has demand deposits of $100,000 . reserves of $30,000 . and loans of $70,000 . If the legal reserve requirement is lowered from 20 percent to 15 percent, this bank can increase its loans by
a. $10,000
b. $15,000
c. $75,000
d. $5,000
e. $ 0
B
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The principle which states that as more and more units of a variable resource are added to a set of fixed resources, the resulting additions to output eventually become increasingly smaller, is the principle of
a. increasing production. b. functioning production. c. diminishing marginal returns. d. increasing returns to scale.
What is the difference between an expenditure-changing policy and an expenditure-switching policy?
What will be an ideal response?
Central planners in command economies
a. generally set production targets for firms. b. always consult consumers on the output of goods they want to consume. c. allow prices to organize the economy's production. d. depend upon the invisible hand to coordinate economic activities.
Define the following terms and explain their importance to the study of macroeconomics
a. central bank b. Federal Open Market Committee c. supply of money d. monetary policy