Answer:
The correct answer is letter "E": convergence hypothesis
Explanation:
In Economics, the convergence hypothesis describes how increasing industrialization in different countries could lead to transform the economy to an industrialized world where the <em>same societal patterns, ideologies, behaviors, and customs</em> will be spread which is likely to create a global culture.
Answer:
The increase in reserve will ultimately lead to an increase in the money supplied.
Explanation:
From the scenario under study, the bank is greeted with uncertain economic realities. To cope with this, the bank resolves that rather than lend out excess reserves, it should rather increase the percentage of deposits held as reserve from 10% to 25%. Thus, this leads to a multiplier effect. And the reserve ratio from the forgoing is 1 to 4. That is, 1/10 to 1/4. Meaning there's a reduction in multiplier effecf of 10 to 4. And looking critically, this is a reciprocal of the new reserve ratio of 1/4
When bank hold more reserve, the ripple effect is that the Fed would buy more bonds. To increase the money supply by $200, however, the Fed will need to get a bond of $50.
The implication of this is that the bank reserve will rise in same amount. But taking the multiplier effect into cognizance, a small multiplier will be occasioned in form:
$50 * 4= $200.
Effectively, we have increased the money supply by $200, owing to the multiplier effect.
