If a Bank Has $50,000 in Excess Reserves at the End

question 87

Multiple Choice

If a bank has $50,000 in excess reserves at the end of a business day and the required reserve ratio is 20 percent,the bank can increase its profits by:

• A)keeping the excess reserves.
• B)loaning out $40,000.
• C)loaning out $50,000 to another bank.
• D)borrowing $50,000 to remove the excess reserves.
• E)keeping $10,000 and depositing $40,000 with the Fed.

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Definitions:

Higher-order Conditioning

A form of learning in which a stimulus is paired with a previously conditioned stimulus, creating the same conditioned response.

Established CS

In the field of classical conditioning, it refers to a previously neutral stimulus that, after association with an unconditioned stimulus, now triggers a conditioned response.

New CS

In classical conditioning, a novel conditioned stimulus that is introduced and associated with an unconditioned stimulus to elicit a conditioned response.

Operant Conditioning

An educational method where the intensity of an action is altered via rewards or penalties.