Refer to the Economics in Practiceon p. 513: The Economics in ...

[ashley]

Question 1

Refer to the information provided in Scenario 25.1 below to answer the question(s) that follow.



SCENARIO 25.1: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up.










Refer to Scenario 25.1. If the required reserve ratio were changed to 10%, total loans of Bank No. 2 will change to

◦ 77,400.
◦ 81,000.
◦ 85,000.
◦ 90,000.

Question 2

Refer to the 
Economics in Practice on p. 513: The 
Economics in Practice feature discusses three examples of many people who have claims on a bank presenting those claims at the same time. This describes a situation known as

◦ barter.
◦ a bank run.
◦ currency debasement.
◦ the liquidity property of money.

[Eazy416]

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[ashley]

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[Eazy416]

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