If There Are No Excess Reserves in the Banking System

question 92

Multiple Choice

If there are no excess reserves in the banking system and the Fed lowers the required reserve ratio,it follows that banks will now have __________,which they can use to extend loans and create new __________.

• A) positive excess reserves; checkable deposits
• B) negative excess reserves; currency
• C) positive excess reserves; currency
• D) more vault cash; checkable deposits
• E) none of the above

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Definitions:

Confusion

The act of mingling or blending goods or property in such a way that they can no longer be distinguished; in legal terms, it can affect rights of ownership.

Negotiable Document of Title

A document guaranteeing the possession and control of goods, which can be transferred to another party to facilitate commerce.

Legal Title

The formal right of ownership of property, which may or may not include the right to use or occupy the property.

Friendly Fire

Incidents in which persons are inadvertently harmed or killed by forces from their own side during an armed conflict or military operation.