If a Bank That Desires to Hold No Excess Reserves

question 203

Multiple Choice

If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 10 percent receives a deposit of $400 it has a

• A)$400 increase in excess reserves and no increase in required reserves.
• B)$400 increase in required reserves and no increase in excess reserves.
• C)$360 increase in excess reserves and a $40 increase in required reserves.
• D)$40 increase in excess reserves and a $360 increase in required reserves.

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Definitions:

Significance Level

The probability of rejecting the null hypothesis when it is true, also known as the alpha level, used as a criterion for statistical significance.

Location

A specific position or point in physical or virtual space.

Z-statistic

A type of standard score that indicates how many standard deviations an element is from the mean, used in significance testing.

Significance Level

A threshold for determining whether a p-value indicates a statistically significant result, usually set at 0.05 (5%).