The Banking System Has Deposits of $100 Million and No

question 62

Multiple Choice

The banking system has deposits of $100 million and no excess liquidity. Suppose all the banks decide to reduce their liquidity ratio from 25% to 20%. If there are no leakages from the banking system, the banking system:

• A) could make additional loans up to $25 million
• B) could make additional loans up to $20 million
• C) could not make any additional loans because it has not received any new deposits
• D) could make additional loans up to $5 million

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Definitions:

Outliers

Observations in data that do not follow the pattern of the majority, significantly differing from other observations.

Covariances

Covariances are measures that indicate the extent to which two random variables change in tandem. A positive covariance indicates that two variables tend to move in the same direction.

Regression Analysis

A numerical approach for analyzing the correlation between a dependent variable and one or more independent variables.

Descriptive Statistics

Statistics that summarize or describe the characteristics of a data set, including measures like mean, median, mode, and standard deviation.