Suppose the Banking System Currently Has $400 Billion in Reserves

question 114

Multiple Choice

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits?

• A)$5,000 billion
• B)$4,937.5 billion
• C)$5,062.5 billion
• D)$4,995 billion

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Definitions:

Organization Expense

These are initial costs incurred in the process of starting a business, such as legal fees, state fees, and promotional expenses, which may be expensed or capitalized over time.

Common Stock

A form of corporate equity ownership, a type of security representing an ownership share in a corporation.

Common Stock Subscribed

Common stock subscribed refers to shares that investors have committed to purchase but have not yet been issued by the company.

Par Value

The nominal or face value of a bond, stock, or coupon as stated by the issuer.