Suppose a Bank Has Checkable Deposits of $100,000 and the Required

question 82

Multiple Choice

Suppose a bank has checkable deposits of $100,000 and the required reserve ratio is 20 percent. If the bank currently has $100,000 in reserves, it could lend out as much as:

• A) $100,000.
• B) $400,000.
• C) $80,000.
• D) $20,000.

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Definitions:

Federal Government's Powers

The specific authorities granted to the federal government of a country, often outlined in its constitution, to manage national affairs and governance.

Discretionary Fiscal Policy

Government policy actions, such as changes in taxation and spending, deliberately undertaken to influence economic activity and stabilize the economy.

Government Spending

Refers to the expenditure by government bodies on goods and services, including investments, infrastructure, and payments for social services.

Taxes

Compulsory financial charges or some other type of levy imposed upon a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenses.