You Withdraw $2,000 from Your Account

question 576

Multiple Choice

You withdraw $2,000 from your account. Your bank has a desired reserve ratio of 20 percent. This transaction, by itself, will directly reduce

• A) the quantity of money by $1,600.
• B) deposits by $1,600.
• C) the quantity of money by $2,000.
• D) deposits by $2,000.

---

Definitions:

Contra Equity

An equity account that decreases the total equity of a company, often related to withdrawals or deductions from the total equity.

Common Stock Outstanding

The shares of a corporation's stock that are issued and held by investors, excluding treasury shares.

Common Stock Issued

Shares of a company that have been allocated to shareholders, representing ownership interest in the corporation.

Cumulative

Refers to an overall amount that includes all accumulated adjustments, additions, charges, and other relevant items over a period.