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Chrome File Edit View History Bookmarks People Window Help D 100% 3Tue May 17 3:05:13 PM E Home - Student Rate My Professors - Revi Na ASSIST Prompt Page Heinle Learning Center . ORE: ECON220 1018-f out 4 - a CD www.macmillanhighered.com/launchpad/Krugmanwellsmacro42670297 /startitem/PX MULTIPART LESSONSeesb2bf8047a622cfsac4700edda?modestarta... Y Done Quiz 4 1. Suppose the banking system does NOT hold excess reserves and the reserve ratio is 20%. If Sam deposits $500 cash in his checking account, the banking system can increase the money supply by O$5,000. O $2,000. O$2,500 . O$400. 2. Suppose the reserve ratio is 25%; the money multiplier is: 0 S. 0 0.25. 0 0.04. 3. Banks don't lend out all of the funds deposited because: 0 it would not be profitable . they have to satisfy any depositor who wants to withdraw funds. they have to reduce their liquidity position. they have to make more money on interest-bearing deposits. 4. Decisions about monetary policy are made by the president and Congress. the President's Council of Economic Advisers, the Federal Open Market Committee. representatives of banks that are members of the Federal Reserve System. Remaining at State D2 Rs 19 g Da Doo is WIXO OT SIMO Q COLLEEO

Explanation / Answer

1.

2000 is answer

as $500, the bank will keep 100(500*20%)

then 400 will result in = 400/20%=2000

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