A Bank Has a Reserve Requirement of 0

question 11

Multiple Choice

A bank has a reserve requirement of 0.08. If it has demand deposits of $200,000 and is holding $4,000 in reserves:

• A)all the bank's reserves are excess reserves.
• B)the bank is not meeting its reserve requirement.
• C)the bank is holding $2,000 in excess reserves.
• D)the bank could extend additional loans and still meet its reserve requirement.

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