If Bank a Holds $200 in Reserves, Deposits Are $1000

question 90

Multiple Choice

If Bank A holds $200 in reserves, deposits are $1000, and the desired reserve ratio is 15 percent, how much are excess reserves?

• A) zero, because banks never hold excess reserves
• B) $150
• C) $200
• D) $50

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Definitions:

Rationality

The quality of being based on or in accordance with reason or logic, often discussed in the context of decision-making processes.

Logical Thinking

The process of reasoning consistently and rigorously, often following a sequence of steps based on established rules and principles.

Ego

In psychoanalytic theory, the part of the psyche that mediates between the desires of the id, the moral of the superego, and the realities of the external world.

Socializing Agent

An individual, group, or institution that plays a role in integrating individuals into the norms, values, and cultures of their society.