Consider a New Deposit of $10 000 to the Canadian

question 7

Multiple Choice

Consider a new deposit of $10 000 to the Canadian banking system. The bank that initially receives this deposit will find itself with

• A)no excess reserves if there is no reserve requirement.
• B)$1000 of excess cash reserves if its target reserve ratio is 10 percent.
• C)$2000 of excess cash reserves if its target reserve ratio is 10 percent.
• D)$8000 of excess cash reserves if its target reserve ratio is 20 percent.
• E)$10 000 of excess cash reserves if its target reserve ratio is 100 percent.

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