If a Bank Is Subject to a Reserve Requirement of 15

question 54

Multiple Choice

If a bank is subject to a reserve requirement of 15%, then it is required to

• A) place 15% of its deposits in the vault.
• B) lend out 15% of its deposits.
• C) place 15% of its deposits in the account with its regional Federal Reserve bank.
• D) place 15% of its deposits in the account with its regional Federal Reserve bank or the vault.

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Definitions:

Fraction

A mathematical expression representing the division of one quantity by another; it consists of a numerator and a denominator.

Multiply

The mathematical operation of increasing one number by the value of another, a basic arithmetic function symbolized by the symbol “x” or “*”.

Smaller

Lesser in size, amount, or degree compared to another reference point or object.

Nearest Tenth

A mathematical term describing the rounding of numbers to the first decimal place.