A Bank Has $100,000 in Checkable Deposits and $30,000 in Reserves

question 3

Multiple Choice

A bank has $100,000 in checkable deposits and $30,000 in reserves. If the required reserve ratio is 10%, what is the amount of excess reserves?

• A) $0
• B) $10,000
• C) $20,000
• D) $30,000

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Definitions:

Demand Curve

A graph plotting the quantity of a good that buyers wish to purchase at different price levels, typically sloping downwards from left to right.

Consumer Confidence

A measure of the overall consumer optimism about the state of an economy, reflected through spending and saving behaviors.

Housing Bubble

A temporary condition characterized by an unusual increase in housing prices fueled by demand, speculation, and exuberant spending to the levels that income levels do not support.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers, usually downward sloping to the right indicating inverse relationship between price and quantity demanded.