The maximum amount by which the entire banking system can create money is equal to:
a. a fraction of its excess reserves.
b. a fraction of its required reserves.
c. a multiple of its total reserves.
d. a multiple of its excess reserves.
e. its excess reserves.
Question 2
Coca-Cola bottlers increased their prices as the price of sugar (an important ingredient in producing Coke) rose sharply in the late 1980s. Under these circumstances, the increase in the price of Coke occurs as a result of a(n):
a. decrease in supply.
b. decrease in demand.
c. increase in supply.
d. increase in demand.
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