A Bank Has $50,000 in Deposits from Its Checking Account

question 72

Multiple Choice

A bank has $50,000 in deposits from its checking account customers and loans of $49,000. Of the $49,000 loaned out, $43,000 remains in the checking accounts of the loan recipients. The bank has $50,000 cash on hand, and the reserve requirement is 25%. The reserve ratio for this bank is _____, and _____ meeting its reserve requirement.

• A) 186%; it is not
• B) 53.76%; it is
• C) 0.002%; it is not
• D) 20%, it is

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Definitions:

Services

are intangible products such as healthcare, education, and financial advice that fulfill consumer needs and wants without resulting in the ownership of physical goods.

Tertiary Sector

The segment of the economy that provides services rather than goods, including industries such as retail, healthcare, and education.

Primary Sector

Refers to the part of the economy that is involved in the extraction and production of raw materials, such as mining, agriculture, and forestry.

Farming

The practice of cultivating plants and livestock to produce food, fiber, and other products.