Suppose a Bank Has $100 Million in Checking Account Deposits

question 106

Multiple Choice

Suppose a bank has $100 million in checking account deposits with no excess reserves and the required reserve ratio is 10 percent.If the Federal Reserve reduces the required reserve ratio to 8 percent,then the bank can make a maximum loan of

• A)$0.
• B)$2 million.
• C)$8 million.
• D)$10 million.

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Definitions:

Brainstorming

A collaborative idea generation process where participants freely share thoughts and solutions to a problem without immediate criticism.

Organization Financially

Refers to the financial health, management, and stability of an organization, including aspects like budgeting, revenue generation, and financial planning.

Excessive Amounts

Quantities that surpass what is normal, necessary, or reasonable, often leading to negative consequences or inefficiency.

Entire Organization

Refers to encompassing all departments, employees, and processes in a holistic view of the organization.