How much additional money will be created if you deposit a $200 check into your bank, which holds a 10% reserve ratio?
A. $200 will be created since your checking account balance has increased by $200
B. $180 since the bank will keep 10% of your $200 check in reserves and lend the other 90%
C. $2,000 since the money multiplier will be equal to 10 and reserves have increased by $200
D. No money will be created since the $200 check does not represent an increase in reserves
Ans: D. No money will be created since the $200 check does not represent an increase in reserves
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Refer to the scenario above. What is the probability of getting tails?
A) 25% B) 50% C) 75% D) 100%
An increase in financial innovations such as increased network of ATM machines and the widespread acceptance of debit cards
A) will shift the demand for money to the right. B) will shift the demand for money to the left. C) increases the quantity of money people want to hold at each interest rate. D) decreases the quantity of money people want to hold at each interest rate.