Suppose Bank ABC Has a Target Reserve Ratio of 10

question 47

Multiple Choice

Suppose Bank ABC has a target reserve ratio of 10%.If Bank ABC receives a new deposit of $100 000 it will immediately find itself with

• A)no excess cash reserves.
• B)excess cash reserves of $10 000.
• C)excess cash reserves of $90 000.
• D)excess cash reserves of $100 000.
• E)excess cash reserves equal to 10% of its deposits.

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