Initially a Bank Has a Required Reserve Ratio of 20

question 13

Multiple Choice

Initially a bank has a required reserve ratio of 20 percent and no excess reserves.If $5,000 is deposited into the bank,then initially,ceteris paribus,

• A)This bank can increase its loans by $5,000.
• B)This bank can increase its loans by $4,000.
• C)Total reserves will increase by $4,000.
• D)Required reserves will increase by $5,000.

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Definitions:

Low Chance

A situation or event that is unlikely to occur or has a minimal likelihood of happening.

Low Impact

implies minimal harm or negative effects, often related to environmentally friendly and sustainable practices in businesses and products.

Emergency Response Protocols

Predefined, structured procedures designed to be implemented in case of urgent or crisis situations to protect lives and property.

High Chance

A term implying a significant possibility or likelihood of an event occurring.