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Subject - Economics:

Macroeconomics

MCQ - 72-4082

Question:

The fractional reserve banking system’s ability to create money is lessened if

  1. households that borrow redeposit the entire loan amounts back into the banks.
  2. banks hold excess reserves.
  3. banks lend all excess reserves to borrowing customers.
  4. banks hold excess reserves.
  5. the Federal Reserve lowers the reserve ratio.

Correct Answer: B

Explanation:

Money creation slows if banks do not lend all excess reserves.

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269 MCQ for effective preparation of the test of Macroeconomics of Economics section.

Read the MCQ statement: The fractional reserve banking system’s ability to create money is lessened if , keenly and apply the method you have learn through the video lessons for Macroeconomics to give the answer. Record your answer and check its correct answer and video explanation for MCQ No. 72-4082.

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