If Jose Deposits $2,000 in His Bank and the Desired

question 54

Multiple Choice

If Jose deposits $2,000 in his bank and the desired reserve ratio is 10 percent, what is the amount of new loans that the bank can make?

• A)$2,000
• B)$2,200
• C)$200
• D)$1,800
• E)$1,900

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Definitions:

Derivative Suit

A lawsuit brought by a shareholder on behalf of a corporation against a third party, often an insider of the corporation, when the corporation fails to take action against the wrongdoer.

Ultra Vires

Acts performed beyond the scope of the legal power or authority granted to a person or corporation.

Apparent Authority

A situation in contract law where a reasonable person would understand that an agent had authority to act, even if the agent did not have actual authority from the principal.

Ratification

Officially confirming and giving legal validity to an agreement or treaty through formal approval.