Suppose a Bank Has a Desired Reserve Requirement Ratio of 12

question 567

Multiple Choice

Suppose a bank has a desired reserve requirement ratio of 12 percent. If someone deposits $1,000 in the bank,

• A) the bank can make loans of $1,000.
• B) immediately after the deposit, excess reserves increase by $880.
• C) the bank's desired reserves rise by $1,000.
• D) Both answers B and C are correct.

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Definitions:

Moral Liberty

Describes the freedom to act in accordance with one's ethical beliefs and principles without external constraint.

Male Authority

The dominance or control traditionally held by men in various social, political, and familial contexts.

Puritans

A group of English Reformed Protestants in the 16th and 17th centuries who sought to "purify" the Church of England from its "Catholic" practices.

Household

A social unit consisting of those living together in the same dwelling, typically a family or group of roommates.