2009, Question 3 · 6 points
Deposits, reserves and the money supply
With a 20 percent reserve requirement, compute what a cash deposit lets banks lend and how far deposits and the money supply can grow, compute the effect of a Fed bond purchase, and explain what happens to real wages.
This exam had three free-response questions with a 10 minute planning period and 50 minutes of writing, and students were told to spend about half the time on Question 1 and split the rest evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.
Lessons this question draws on
1 Read the question
The question is College Board's, from the 2009 exam. It starts on page 3 of the PDF. College Board no longer posts this exam, so it opens from the copy of College Board's PDF that the Internet Archive saved on September 28, 2023.
2 Write your answer
Answer each part the way you would on the exam, in full sentences, with your work shown. Your writing saves as you type.
3 Score it
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Scoring guidelines (PDF, page 5) What the exam readers saw (Student Performance Q&A)
Question, scoring guidelines and Chief Reader report: College Board, from the Internet Archive. The title, summary are ours.