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If the Reserve-Deposit Ratio Falls,then

Question 66
Multiple Choice

If the reserve-deposit ratio falls,then A) the ability of commercial banks to create money is greater. B) the ability of commercial banks to create money is lower. C) the money multiplier is smaller. D) the level of required reserves is greater. E) the ability of commercial banks to create money is unaffected.

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Q 67
The banking system can increase chequing deposits by more than a single bank,because A) the banking system must keep reserves equal to 100% of its chequing deposits. B) the central bank follows policies that prevent reserves from falling below the level required by law. C) excess reserves loaned out by any particular bank will be deposited in some other bank. D) borrowers often retain a portion of a loan in cash. E) excess reserves loaned out by any particular bank will be taken out of circulation.
Q 68
Given a required reserve-deposit ratio of 5% for all banks and assuming individuals hold no cash,total bank reserves of $400 billion can support deposits of A) $400 billion. B) $800 billion. C) $4,000 billion. D) $8,000 billion. E) $9,000 billion.
Q 69
Suppose the banking system has $100,000 in outstanding deposits and actual reserves of $35,000.If the required reserve ratio is 10% and individuals hold no cash,the maximum amount the banking system can now add to the money supply is A) $25,000. B) $35,000. C) $250,000. D) $1,000,000. E) $1,500,000.
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