A Bank That Has Liabilities of $150 Billion and a Net

question 14

Multiple Choice

A bank that has liabilities of $150 billion and a net worth of $20 billion must have

• A) excess reserves of $130 billion.
• B) assets of $150 billion.
• C) excess reserves of $150 billion.
• D) assets of $170 billion.

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Definitions:

Financial Transaction

An agreement, communication, or movement of funds between two parties that results in the exchange of financial instruments.

Disposable Income

Disposable income is the amount of money that households have available for spending and saving after income taxes have been accounted for.

Typical Corporation

A standard business entity where ownership is divided into shares of stock, offering limited liability to its shareholders and being subject to corporate tax rates.

Disposable Income

Money left for savings and expenditures in households after paying income taxes.