Suppose a Bank Has $10,000 in Deposits and $1,000 in Reserves

question 221

Multiple Choice

Suppose a bank has $10,000 in deposits and $1,000 in reserves. The required reserve ratio is 5%. Which of the following occurs if the required reserve ratio is increased to 10%?

• A) The bank's required reserves will decrease to $500.
• B) The bank's excess reserves will increase to $1,000.
• C) The bank's required reserves will increase to $1,000.
• D) The bank's ability to create loans increases by 5%.

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Definitions:

Sleep Spindles

Sleep spindles are sudden bursts of oscillatory brain activity visible on an EEG during Stage 2 sleep, associated with memory consolidation and synaptic plasticity.

Delta Waves

Slow, high amplitude brainwaves of less than 4 Hz that are typically associated with the deepest stages of sleep and unconsciousness.

Sleep Deprivation

Any significant loss of sleep, resulting in problems in concentration and irritability.

Insomnia

Difficulty in falling asleep or staying asleep, even when a person has the chance to do so, affecting physical and mental health.