The Following Balance Sheet Is for the First Edmonton Bank

question 153

Multiple Choice

The following balance sheet is for the First Edmonton Bank.Assume that the desired reserve ratio is 10%.All figures are in millions. Refer to the above information.Suppose that customers of this bank collectively write cheques for cash at the bank in the amount of $1 million.As a result, the bank's excess reserves diminish to:

• A)$0
• B)$6 million.
• C)$9 million.
• D)$9.1 million.

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Definitions:

Economic Policy

Strategies and actions taken by the government or regulatory bodies to influence the economy's behavior and outcomes.

Economic Growth

The escalation in the real value of goods and services an economy produces, adjusted for inflation, across a timeframe.

Economic Output

The total value of all goods and services produced by an economy over a specific time period.

National Sales Tax

A tax levied on retail sales of goods and services at the national level, typically a percentage of the sales price.