Suppose a Bank's Deposit Liabilities Increase by $10 Million

question 25

Multiple Choice

Suppose a bank's deposit liabilities increase by $10 million. If the required reserve ratio is 20 percent, bank reserves will increase by

• A)Not enough information is given.
• B)$2 million.
• C)$8 million.
• D)$1 million.
• E)$10 million.

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Definitions:

Book Gills

Respiratory organs found in horseshoe crabs and some arachnids, consisting of leaf-like structures stacked on top of each other.

Earthworms

Terrestrial invertebrates that belong to the phylum Annelida, known for their role in aerating and enriching soil.

Setae

Stiff, hair-like structures on the outer surface of animals, notably invertebrates, used for sensation, locomotion, or attachment to surfaces.

Aortic Arches

The series of curved blood vessels that diverge from the top of the heart; vital in the arterial blood circulation system.