Compared with a 100% reserve system, fractional reserve banking
a) makes the economy more stable
b) creates a greater risk of bank insolvency
c) gives banks less control over the money supply
d) makes the money multiplier smaller
e) means that each dollar of currency is backed by a smaller amount of gold
b) creates a greater risk of bank insolvency
You might also like to view...
Refer to Figure 3-13. Suppose Peru decides to increase its production of emeralds by 2. What is the opportunity cost of this decision?
a. 30 rubies b. 40 rubies c. 60 rubies d. 120 rubies
The slope of the LM curve has been shown to depend most crucially on the interest elasticity of
a. consumption. b. saving. c. money demand. d. investment.
In a fractional reserve economy where the required reserve ratio is 10%, must it be the case that an initial deposit of $100 increases the total money supply by $1,000? Explain
The short-run aggregate supply curve _____
Fill in the blank(s) with the appropriate word(s).