(Table) SCENARIO: Assume That the Empathy State Bank Begins with the Balance

question 214

Multiple Choice

(Table) SCENARIO: Assume that the Empathy State Bank begins with the balance sheet below and is fully loaned up. If this bank is subject to a reserve requirement of 5%, how much more can it loan out if it wants to be fully loaned up?

• A) $2,500
• B) $5,000
• C) $10,000
• D) Nothing. This bank is already fully loaned up.

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Definitions:

Net Realizable Value

The projected sales price of products subtracted by the cost associated with their sale or disposal.

Merchandise

Goods that are bought and sold by businesses; also refers to the commodities or products available for sale in retail or wholesale.

Total Value

The entire worth of an asset, portfolio, or company, factoring in all components of value.

Perpetual Inventory System

An inventory management system that updates inventory records for each purchase and sale transaction in real-time.