If a Single Bank Has $25,000 in Excess Reserves and the Desired

question 108

Multiple Choice

If a single bank has $25,000 in excess reserves and the desired reserve ratio is 20 percent, what is the maximum this bank can loan?

• A)$20,000
• B)$25,000
• C)$125,000
• D)$30,000
• E)$5,000

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Definitions:

Original Position

A hypothetical scenario used in political philosophy, particularly by John Rawls, to establish principles of justice that are chosen by individuals under a veil of ignorance, without knowledge of their place in society.

Talents and Abilities

Refer to the natural aptitudes and learned skills that individuals possess, which can vary widely between different people.

Model of Justice

A framework or paradigm used to understand, analyze, and implement justice and legal systems, often reflecting societal norms and values about fairness and equity.

Veil of Ignorance

A philosophical concept proposed by John Rawls suggesting that decisions should be made without the decision-makers knowing their status, to ensure fairness and equity in moral judgments.