Suppose a Bank Has $5,000,000 in Deposits,a Required Reserve Ratio

question 73

Multiple Choice

Suppose a bank has $5,000,000 in deposits,a required reserve ratio of 20 percent,and total reserves of $1,000,000.Then the bank has excess reserves of

• A)$1,000,000.
• B)$2,000,000.
• C)$500,000.
• D)$0.

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Definitions:

Inelastic

Describes a situation where the demand or supply for a good or service is less responsive to changes in price.

Elastic Demand

A situation in economics where the demand for a product is sensitive to price changes, leading to a significant change in quantity demanded if the price increases or decreases.

Wage Increase

Refers to the rise in the hourly, daily, or monthly payments made to employees for their work or services.

Total Payroll

The complete amount of money a business pays to its employees over a specific period, including wages, salaries, bonuses, and deductions.