Suppose a Bank Has $10,000 in Deposits and $1,000 in Reserves

question 221

Multiple Choice

Suppose a bank has $10,000 in deposits and $1,000 in reserves. The required reserve ratio is 5%. Which of the following occurs if the required reserve ratio is increased to 10%?

• A) The bank's required reserves will decrease to $500.
• B) The bank's excess reserves will increase to $1,000.
• C) The bank's required reserves will increase to $1,000.
• D) The bank's ability to create loans increases by 5%.

---

Definitions:

Menopause

A natural biological process in women that marks the end of menstruation and reproductive years, typically occurring in middle age.

Menstrual Cycle

The regular natural cycle of hormonal changes in the female body, preparing it for pregnancy, marked by menstruation in the absence of conception.

Ovulation

The phase of the female menstrual cycle during which a mature egg is released from the ovary.

Testosterone Decline

The gradual decrease in testosterone levels in men as they age, which can affect physical, sexual, and psychological health.