Suppose That Initially a Bank Has Excess Reserves of $800

question 93

Multiple Choice

Suppose that initially a bank has excess reserves of $800 and the reserve ratio is 30%. Then Andy deposits $1,000 of cash in his checking account and the bank lends $600 to Molly. That bank can lend an additional:

• A) $100.
• B) $800.
• C) $900.
• D) $300.

---

Definitions:

Units

Units refer to the individual components or quantities of a product, investment, or other items that are counted or measured.

Month

A unit of time, roughly based on the period of the Moon's orbit around Earth, traditionally used to measure durations of approximately 30 days.

Break Even

The point at which total costs and total revenue are equal, resulting in no net loss or gain.

Variable Cost

Costs that vary directly with the level of production or sales volume, such as materials and labor.