Which of the following statements is correct? a. In the special case of 100-percent-reserve banking, the reserve ratio is 1, the money multiplier is 2, and banks create money b. In the special case of 100-percent-reserve banking, the reserve ratio is 1, the money multiplier is 1, and banks do not create money c. When the reserve ratio is 0.5, then the money multiplier is 1 and banks do not create money d. When the reserve ratio is 0.125, then the money multiplier is 8, and each bank loans $8 for every $1 that it accept in deposits
Which of the following statements is correct? a. In the special case of 100-percent-reserve banking, the reserve ratio is 1, the money multiplier is 2, and banks create money b. In the special case of 100-percent-reserve banking, the reserve ratio is 1, the money multiplier is 1, and banks do not create money c. When the reserve ratio is 0.5, then the money multiplier is 1 and banks do not create money d. When the reserve ratio is 0.125, then the money multiplier is 8, and each bank loans $8 for every $1 that it accept in deposits
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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QUESTION 23
Which of the following statements is correct?
a.
In the special case of 100-percent-reserve banking, the reserve ratio is 1, the money multiplier is 2, and banks create money
b.
In the special case of 100-percent-reserve banking, the reserve ratio is 1, the money multiplier is 1, and banks do not create money
c.
When the reserve ratio is 0.5, then the money multiplier is 1 and banks do not create money
d.
When the reserve ratio is 0.125, then the money multiplier is 8, and each bank loans $8 for every $1 that it accept in deposits
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