The Following Balance Sheet Is for the First Edmonton Bank

question 56

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.

---

Definitions:

Oligopolistic Models

Economic models that describe markets in which a few firms dominate, often leading to pricing and output decisions that consider the actions of competitors.

Cartel

An agreement among competing firms to control prices or exclude entry of a new competitor in a market, often in order to maximize the members' profits at the expense of consumers.

Herfindahl-Hirschman Index

A measure used to assess the market concentration and competition level within an industry, calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers.

Market Share

The portion of a market controlled by a particular company or product, indicative of competitiveness.