Suppose a Bank Has a Desired Reserve Requirement Ratio of 12

question 21

Multiple Choice

Suppose a bank has a desired reserve requirement ratio of 12 percent. If someone deposits $1,000 in the bank

• A) immediately after the deposit, unplanned reserves increase by $880.
• B) the bank can make loans of $1,000.
• C) the bank's desired reserves rise by $1,000.
• D) immediately after the deposit, excess reserves increase by $880.

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Definitions:

Year 2

Designates the second fiscal or calendar year in a sequence of years, crucial for tracking progress, budgets, and planning in various contexts.

Average Collection Period

The average amount of time it takes for a business to receive payments owed by its customers for goods or services sold on credit.

Year 2

Refers to the second year of a project, company's fiscal year, or any specified time period.

Accounts Receivable Turnover

A financial ratio indicating how many times a company's receivables are turned over during a period.