A Bank Has $50,000 in Deposits from Its Checking Account

question 160

Multiple Choice

A bank has $50,000 in deposits from its checking account customers and loans of $49,000. Of the $49,000 loaned out, $43,000 had remained in the checking accounts of the loan recipients but now has been withdrawn as cash by the loan recipients. The bank had $50,000 cash on hand prior to the remaining loan proceeds being converted to cash, and the reserve requirement is 25%. The reserve ratio for this bank after the remaining loan proceeds are converted to cash is _____, and it _____ meeting its reserve requirement.

• A) 0.002%; is not
• B) 14%; is not
• C) 20%; is
• D) 53.76%; is

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Definitions:

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The initial perceptions or judgments formed about individuals or situations based on available sensory and contextual information.

Pygmalion Effect

The phenomenon whereby higher expectations lead to an increase in performance.

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Performance refers to the execution of tasks and activities, and how effectively an individual, team, or organization achieves their objectives and goals.

Expectations

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