If the Desired Reserve Ratio Is 3 Percent and Deposits

question 333

Multiple Choice

If the desired reserve ratio is 3 percent and deposits totaled $575 billion, banks would hold

• A) $534.75 in reserves.
• B) $17.25 billion in unplanned reserves.
• C) $1,725 billion in currency.
• D) $17.25 billion in reserves.

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Definitions:

Market Price

The market rate at which assets or services can be presently exchanged.

Shares Outstanding

The total number of a company's shares of stock that are owned by shareholders, including institutional investors and individual investors.

Net Present Value

A financial metric that calculates the present value of all cash inflows and outflows of a project or investment using a discount rate.

Market Value

The cost existing in the marketplace for trading an asset or service.