A Bank Has $100,000 in Checkable Deposits and $30,000 in Reserves

question 3

Multiple Choice

A bank has $100,000 in checkable deposits and $30,000 in reserves. If the required reserve ratio is 10%, what is the amount of excess reserves?

• A) $0
• B) $10,000
• C) $20,000
• D) $30,000

---

Definitions:

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogenous product, and free entry and exit, leading to price taking behavior.

Price-leadership Model

An economic concept where one or more dominant firms set their prices, and other, smaller firms in the industry then follow by setting the same or similar prices.

Dominant Firm

A company that holds a large portion of the market share within its industry, exerting significant influence or control over market conditions, including prices and product offerings.

Oligopoly

A market structure in which a small number of firms have the large majority of market share.