Suppose a Commercial Bank Has a Target Reserve Ratio of 1

question 84

Multiple Choice

Suppose a commercial bank has a target reserve ratio of 1 percent, but has an actual reserve ratio of 0.8 percent. This bank will likely

• A)allow fewer cash withdrawals by the bank's customers.
• B)maintain its new, higher reserve ratio because it is more profitable.
• C)expand its portfolio of loans.
• D)buy government securities from the Bank of Canada.
• E)contract its portfolio of loans.

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Definitions:

Selfishness

The behavior or attitude of placing one's own needs or desires above the welfare of others, often at the expense of others' well-being.

Precausal Reasoning

A type of reasoning typical in early childhood where cause and effect relationships are understood in simplistic and sometimes magical ways.

Confusion

A state of being puzzled or unclear about something, often due to a lack of understanding or ambiguous information.

Egocentrism

Refers to the cognitive inability to understand that other people's views and perspectives are different from one's own.