Suppose Bank ABC Has a Target Reserve Ratio of 2

question 1

Multiple Choice

Suppose Bank ABC has a target reserve ratio of 2%.If Bank ABC receives a new deposit of $50 million it will immediately find itself with

• A)no excess cash reserves.
• B)excess cash reserves of $1 million.
• C)excess cash reserves of $10 million.
• D)excess cash reserves of $49 million.
• E)excess cash reserves of $49.5 million.

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Definitions:

Electrons

Subatomic particles with a negative charge, found in all atoms and playing essential roles in electricity, chemistry, and bonding.

Compound

A substance made up of two or more different elements that are chemically bonded together.

Free Radicals

Highly reactive molecules with unpaired electrons, capable of causing cellular damage and contributing to disease processes.

Electrons

Subatomic particles with a negative charge, orbiting the nucleus of an atom and involved in chemical reactions and electricity.