If a Bank Has Deposits of $100,000, Cash in Its

question 62

Multiple Choice

If a bank has deposits of $100,000, cash in its vault of $10,000, and $15,000 on deposit at the Federal Reserve and if the required reserve ratio is 20%, then the bank has:

• A) no excess reserves.
• B) excess reserves of $5,000.
• C) insufficient reserves to meet requirements.
• D) an insufficient deposit to loan ratio.

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Definitions:

Fine Imposed

A penalty, usually in the form of a monetary payment, levied on an individual or entity for violating laws or regulations.

Long-Run Equilibrium

A state in a market where all firms are making normal profits, and there is no incentive for firms to enter or exit the industry.

Plaster

A building material used for coating walls and ceilings, which hardens after application.

Labor

The human effort, both physical and mental, that is used to produce goods and services.