Suppose George withdraws 60,000 from his bank. If the reserve ratio is 25 percent, then this transaction will lead to a decrease of ________ in checking account balances.
A) 15,000 B) 45,000 C) 90,000 D) 180,000
Question 2
What can the central bank of Autarkia do to lower the rate which banks charge each other for overnight loans? How will this affect the economy if it is facing a downturn?
What will be an ideal response?