Suppose Bank ABC Has a Target Reserve Ratio of 2

question 26

Multiple Choice

Suppose Bank ABC has a target reserve ratio of 2 percent. If Bank ABC receives a new deposit of $50 million it will immediately find itself with

• A)excess cash reserves of $10 million.
• B)no excess cash reserves.
• C)excess cash reserves of $49.5 million.
• D)excess cash reserves of $49 million.
• E)excess cash reserves of $1 million.

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Definitions:

Antianxiety Drugs

Drugs used to treat and calm anxiety reactions, typically minor tranquilizers.

Benzodiazepines

Drugs that lower anxiety and reduce stress.

Minor Tranquilizers

Medications often prescribed to reduce anxiety and induce calmness without inducing sleep.

Biomedical Therapies

Therapies that directly affect the biological functioning of the body and brain; therapies for mental disorders in which a person with a problem is treated with biological or medical methods to relieve symptoms.