Suppose a Bank Has $1,500,000 in Deposits and the Desired

question 137

Multiple Choice

Suppose a bank has $1,500,000 in deposits and the desired reserve ratio is 12 percent. If the bank is currently holding $200,000 in reserves, the excess reserves are equal to

• A) $120,000.
• B) $40,000.
• C) zero.
• D) $20,000.

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Definitions:

AGI

Adjusted Gross Income; an individual's total gross income minus specific deductions, used to determine taxable income.

Dependent

An individual, typically a child or family member, whose maintenance and support can be claimed as a deduction by another, usually for tax purposes.

Head of Household

A tax filing status for individuals who are unmarried or considered unmarried, provide more than half of the household expenses, and have a qualifying person living with them.

Qualifying Child

A dependent who meets specific IRS criteria relating to relationship, age, support, and residence for tax purposes.