When Bank Deposits Increase from $1 Million to $2 Million

question 162

Multiple Choice

When bank deposits increase from $1 million to $2 million, banks' required reserves increase from $100,000 to $200,000. The required reserve ratio is

• A) 10.0.
• B) 0.10.
• C) 1.00.
• D) 0.25.

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Definitions:

Financial Management

The strategic planning, organizing, directing, and controlling of financial undertakings in an organization or an institution; it also includes applying management principles to the financial assets of an organization.

Third-Party

An entity or individual not directly involved in a transaction or agreement but who may be affected by it or have an interest in it.

Honoring Checks

The act of accepting a check as payment and processing it as directed by the terms written on the check.

Drawer-Depositor

An individual or entity that has the authority to write and deposit checks within a banking relationship.