If the Reserve Requirement Is 5 Percent,a Bank Desires to Hold

question 69

Multiple Choice

If the reserve requirement is 5 percent,a bank desires to hold no excess reserves,and it receives a new deposit of $10,then this bank

• A)must increase its required reserves by $10.
• B)will initially see its total reserves increase by $10.50.
• C)will be able to make new loans up to a maximum of $9.50.
• D)All of the above are correct.

---

Definitions:

Up-regulation

The process by which a cell increases the quantity of a cellular component, such as RNA or protein, in response to an external stimulus.

Amplification

In a biological context, the process by which a signal is intensified, as in the enhancement of a signal in a biochemical pathway.

Sympathetic Neurons

Neurons that are part of the sympathetic nervous system, responsible for the body's 'fight or flight' response.

Neural

Pertaining to the nerves or the nervous system.