If a Bank's Desired Reserve-Deposit Ratio Is 0

question 47

Multiple Choice

If a bank's desired reserve-deposit ratio is 0.33 and it has deposit liabilities of $100 million and reserves of $50 million, it:

• A)has too few reserves and will reduce its lending.
• B)has too many reserves and will increase its lending.
• C)has the correct amount of reserves and outstanding loans.
• D)should increase the amount of its reserves.

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Definitions:

Reconciled Balance

The balance amount after accounting adjustments have been made to reflect true financial position.

Bank Statement

A document provided by a bank that summarizes an account holder's transactions and balances over a specific period of time.

Outstanding Deposits

Deposits that have been made to an account but not yet credited or available for use.

Outstanding Checks

Outstanding checks are checks that have been written and recorded in the account ledger but have not yet been cashed or cleared by the bank.