Suppose a banking system has $120 million in deposits, a required reserve ratio of 20 percent, and total bank reserves for the whole system of $100 million. Then the potential increase in deposit creation for the whole system is equal to
A. $0.
B. $76 million.
C. $380 million.
D. $120 million.
Answer: C
You might also like to view...
Which of the following addresses agency costs?
a. advertising for employee positions in as many outlets as possible b. hiring only from job fairs c. instituting longer work days d. replacing closed offices with cubical office spaces
Which of the following pairs is the most likely to exhibit a direct relationship?
a. The price of gasoline and the amount of gasoline that people purchase. b. Cholesterol levels and the likelihood of developing heart disease. c. Outdoor temperature and heating oil sales. d. Annual income and weekly pawn shop visits.
A country benefits from trade if it is able to obtain a good from a foreign country:
a. that has a very low domestic demand. b. the production of which requires a steady supply of unskilled labor. c. by giving up less of other goods than it would have to give up to obtain the good at home. d. by giving up more of other goods than it would have to give up to obtain the good at home. e. that has a substantial number of substitutes in the domestic market.
Which of the following contributed to the increase in income inequality among families in the United States during the 1980s and 1990s?
a. an increase in the highest marginal tax rates that forced high income earners to work more in order to maintain their income b. an increase in the proportion of both single-parent and dual-earner families c. a decrease in the size of the earnings differential between college graduates and high school graduates d. all of the above