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

question 190

Multiple Choice

(Table) SCENARIO: Assume that the Empathy State Bank begins with the balance sheet below and is fully loaned up. Vanessa has a checking account at Empathy State Bank. If she writes a check for $5,000 to pay for her new car and if the bank has a reserve requirement of 5%, this bank's excess reserves will be:

• A) $250.
• B) $5,250.
• C) $0; Empathy State Bank will be fully loaned up.
• D) negative; Empathy State Bank will need to acquire $2,250 in reserves.

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Definitions:

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Driving Force

An element that pushes or influences individuals or groups to act or react in a particular way.

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