Suppose the Required Reserve Ratio Is 10

question 73

Multiple Choice

Suppose the required reserve ratio is 10%. If a bank has total reserves of $80,000 and checkable deposits of $550,000, what is the amount of the bank's required reserves?

• A) $25,000
• B) $55,000
• C) $80,000
• D) $135,000

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Definitions:

Debtor

A party that owes money to another party.

Proceeds

Something that is exchanged for a debtor’s sold collateral.

Security Interest

A legal claim or lien on collateral that secures the repayment of a debt or obligation, giving the lender rights in the collateral.

Secured Party

The party that holds the interest in a secured property.