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Questions and Answers
Money supply refers to the quantity of money circulating in the economy
Money supply refers to the quantity of money circulating in the economy
True (A)
Open market operations involve the purchase and sale of monetary assets by the central bank
Open market operations involve the purchase and sale of monetary assets by the central bank
False (B)
Reserves refer to deposits that banks have received but have already loaned out
Reserves refer to deposits that banks have received but have already loaned out
False (B)
Fractional-reserve banking is a system in which banks hold all deposits as reserves.
Fractional-reserve banking is a system in which banks hold all deposits as reserves.
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The reserve ratio is the fraction of deposits that banks hold as reserves.
The reserve ratio is the fraction of deposits that banks hold as reserves.
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The money multiplier is the amount of reserves generated with each unit of money in the banking system.
The money multiplier is the amount of reserves generated with each unit of money in the banking system.
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