1. In a fractional-reserve banking system, a bank: a. does not accept deposits. b. does not make loans. c. keeps only a fraction of its deposits in reserve. d. None of the above is correct.
2. A bank's reserve ratio is 5 percent and the bank has $1,000 in deposits. Its reserves amount to Select one: a. $950. b. $5. c. $50. d. $95.
The money multiplier equals
Select one:
a. 1/R, where R represents the quantity of reserves in the economy.
b. 1/(1+R), where R represents the reserve ratio for all banks in the economy.
c. 1/R, where R represents the reserve ratio for all banks in the economy.
d. 1/(1+R), where R represents the quantity of reserves in the economy.