The reason why the banking system can increase checkable deposits by a multiple of initial deposits is that:
A. reserves lost by any particular bank are gained by the Federal Reserve Bank.
B. the banking system must keep reserves equal to 100 percent of its checkable deposits.
C. the central bank follows policies that prevent reserves from falling below the level required by law.
D. borrowers often spend most of a loan which is then deposited.
Answer: D
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Regulation Q was responsible for the drop in importance of __________ as a source of bank funds
A) time deposits B) transactions deposits C) savings deposits D) equity
Answer the next question on the basis of the following table in which columns (1) and (2) indicate the transactions demand (Dt) for money and columns (1) and (3) show the asset demand (Da) for money.(1)Interest Rate(2)Dt(3)Da12%$100$010100208100406100604100802100100If the money supply is $160, the equilibrium interest rate will be
A. 8%. B. 4%. C. 10%. D. 6%.