If a Bank That Faces a 10 Percent Reserve Ratio

question 147

Multiple Choice

If a bank that faces a 10 percent reserve ratio received a deposit of $50,000 and makes a loan to a customer for $5,000,what is the consequence if the bank then deposits the rest of the funds at the Federal Reserve?

• A) Excess reserves increase by $50,000.
• B) Excess reserves increase by $45,000 and required reserves increase by $5,000.
• C) Excess reserves increase by $5,000 and required reserves increase by $45,000.
• D) Excess reserves increase by $40,000 and required reserves increase by $5,000.
• E) Reserves are not affected.

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Definitions:

Restriction Enzymes

Proteins used in molecular biology that cut DNA at specific sequences, important for DNA modification and analysis tasks.

Recombinant DNA (rDNA)

DNA that contains genes from more than one source.

Vectors

Organisms, often insects, that transmit pathogens between humans or from animals to humans.

Restriction Enzymes

Proteins used in molecular biology that cut DNA at specific sequences, facilitating genetic manipulation and analysis.