Suppose That a Bank Does NOT Hold Excess Reserves and the Reserve

question 126

Multiple Choice

Suppose that a bank does NOT hold excess reserves and the reserve ratio is 20%. If Molly deposits $1,000 of cash in her checking account and the bank lends $600 to Freda, the bank can lend an additional:

• A) $400.
• B) $200.
• C) $1,000.
• D) $5,000.

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Definitions:

Non-controlling Interest

A minority stake in a subsidiary that is not owned by the parent company, representing a portion of its equity that is not directly controllable by the parent.

Fair Value

The amount one would expect to receive from the sale of an asset or the cost to settle a liability in a well-organized transaction among market players on the date it's evaluated.

Non-controlling Interest

The portion of equity interest in a subsidiary not attributable, directly or indirectly, to the parent company.

Financial Position

A statement or status of an entity’s resources, liabilities, and equity at a particular point in time, illustrating its economic standing.