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If the Amount of High-Powered Money Were 100 and the Bank

Question 36

Multiple Choice

If the amount of high-powered money were 100 and the bank reserve holding ratio was 0.25 then the maximum stock of money would be (assume that citizens prefer to keep 10% of their money)


A) 100/0.25 which is 400.
B) (100) (1.35) which is 540 0.25.
C) (100) (1.1) which is approximately 314 0.35.
D) (100) (1.35) which is approximately 386 0.35.

Correct Answer:

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