If the Reserve Requirement Is 7 Percent, a Bank Desires

question 105

Multiple Choice

If the reserve requirement is 7 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $300, it

• A)must increase required reserves by $42.
• B)will initially see reserves decrease by $300.
• C)will be able to use this deposit to make new loans amounting to $300.
• D)must increase required reserves by $21.

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Definitions:

Nerve Cell Bodies

Also known as neurons, these are the part of the nerve cell that contains the nucleus and most of the cytoplasm.

Central Nervous System

The part of the nervous system that consists of the brain and spinal cord, responsible for processing and sending out neural signals.

Ganglia

Structures containing a collection of nerve cell bodies, typically located outside the central nervous system (brain and spinal cord).

Synapse

The junction between two neurons or a neuron and a muscle where signal transmission occurs.