Use the Following to Answer Questions

question 203

Multiple Choice

Use the following to answer questions .
Exhibit: Reserves, Loans, and Money

-(Exhibit: Reserves, Loans, and Money) If the required reserve ratio is 10% and the market interest rate is 8%, what is Bolton Bank's opportunity cost of holding the excess reserves it is currently holding?

• A) $5.6 million
• B) $3.2 million
• C) $0.8 million
• D) 0; Bolton Bank has no excess reserves.

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Definitions:

Secondary Gains

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Mute

Unable or unwilling to speak, often due to psychological or physiological conditions.

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The quality of being friendly, generous, and considerate towards others without expecting anything in return.

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