With a reserve ratio of 10%, the banking system can create ____ with each dollar

ID: 1111923 • Letter: W

Question

With a reserve ratio of 10%, the banking system can create ____ with each dollar of deposits.

a$1

$10

3 points

Question 18

An increase in the target for the federal funds rate would be an example of

expansionary fiscal policy.

expansionary monetary policy.

contractionary fiscal policy.

contractionary monetary policy.

Question 19

New tools of monetary policy created in 2008 included

restoration of individual income tax rates to their pre-2001 levels

elimination of the requirement that banks hold reserves against deposits

open market purchases and sales of short-term U.S. government securities

Fed purchase of corporate paper and a new discount window for investment banks

a$1

$10

17) Option d is correct (Money supply added = Deposit/required reserve ratio = 1/0.1 = $10)

18) Option d is correct (An increase in the target for the federal funds - contractionary monetary policy)

19) Option d is correct (New tools included - Fed purchase of corporate paper and a new discount window for investment banks)

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