Assume That the Commercial Banking System Has Checkable Deposits of $10

question 157

Multiple Choice

Assume that the commercial banking system has checkable deposits of $10 billion and excess reserves of $1 billion at a time when the reserve requirement is 20 percent.If the reserve requirement is now raised to 30 percent, the banking system then has

• A)excess reserves of $2 billion.
• B)neither an excess nor a deficiency of reserves.
• C)a deficiency of reserves of $.5 billion.
• D)excess reserves of only $.5 billion.

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Prior Experience

refers to the knowledge or skill that a person has gained before the current point in time or event.

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The cognitive process leading to the selection of a course of action among several alternatives, often involving a recognition of the problem, information gathering, evaluation of alternatives, and making a final decision.