Gce Model Questions Vol1 2023 Economics Question 7

Practice objective / multiple choice question 7 from the 2023 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2023 Economics Objective / Multiple Choice Medium Difficulty
Question 7 GCE_MODEL_QUESTIONS_VOL1 • 2023 • ECONOMICS • objective

At the start of 2020 the banking system holds \(\$500\) bn in deposits. The required reserve ratio is 5 %. The central bank raises the required reserve ratio to 8 % and at the same time injects \(\$40\) bn of new reserves through an open‑market purchase. Assuming banks lend out all excess reserves, what is the increase in total deposits after these actions?

Answer Options

A. Approximately \\(\\$30.0\\) bn increase in deposits
B. Approximately \\(\\$18.5\\) bn increase in deposits
Correct Answer C. Approximately \(\$23.1\) bn increase in deposits
D. Approximately \\(\\$21.0\\) bn increase in deposits
Correct Answer
C
Correct Option:
Approximately \(\$23.1\) bn increase in deposits

About This Question

This is Gce Model Questions Vol1 2023 Economics Question 7. It is one of the objective questions from the 2023 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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