Use the Following Example to Answer the Following Questions

question 123

Multiple Choice

Use the following example to answer the following questions:
Imagine that Stella deposits $25,000 in currency (which she had been storing in her closet) into her checking account at the bank.Assume that this institution has a required reserve ratio of 25 percent.
-As a result of this deposit,what is the maximum amount in loans that can be made by all the banks in the banking system?

• A) $0
• B) $18,750
• C) $25,000
• D) $31,250
• E) $100,000

---

Definitions:

Current Ratio

A measure of a corporation's capability to meet obligations due in less than one year, found by dividing its total current assets by its total current liabilities.

Company

A company is a legal entity formed by a group of individuals to engage in and operate a business—commercial or industrial—enterprise.

Working Capital

The distinction between a business's immediate assets and liabilities, showcasing its operational effectiveness and short-term financial status.

Company

A legal entity formed by a group of individuals to operate a business, which can own property, incur liabilities, and sell products or services.