The current reserve requirement is 25% for every $100 dollar that is deposited h
ID: 1202299 • Letter: T
Question
The current reserve requirement is 25% for every $100 dollar that is deposited how many are added to the economy
$25
$400
$200
$100
In the previous question the reserve requirement was 25% if the Federal Reserve lowered the requirement to 10%. We would expect which of the following to happen
An increase in the money supply which would increase GDP and inflation.
A decrease in the money supply which would increase GDP and inflation.
A increase in the money supply which would increase GDP and lower inflation.
A decrease in the money supply which would increase GDP and lower inflation.
An increase in the money supply which would increase GDP and inflation.
A decrease in the money supply which would increase GDP and inflation.
A increase in the money supply which would increase GDP and lower inflation.
A decrease in the money supply which would increase GDP and lower inflation.
Explanation / Answer
Answer 1)
Since the amount kept as reserve is temporary, $100 is added to the economy. So, option D is the correct option.
Answer 2)
An increase in the money supply which would increase GDP and inflation.
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