A Bank Has No Excess Reserves

question 122

Multiple Choice

A bank has no excess reserves. Then it receives a new deposit for $100,000. If it has a desired reserve ratio of 20 percent, by how much can it increase its loans?

• A) $20,000
• B) $80,000
• C) $500,000
• D) $400,000

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Definitions:

Sociological Question

A query aimed at understanding social phenomena, including the structures of societies, the dynamics of social relationships, and cultural norms.

Stable Patterns

Repeated, consistent behaviors or structures in a system or society that show little change over time.

Impression Management

The process by which individuals attempt to control the impressions others form of them, especially in social interactions and presentation of self.