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:

Physiological Responses

Automatic reactions of the body to a stimulus, including changes in heart rate, respiration, and secretion of hormones.

Fear

A negative feeling resulting from the assumption that a person or object poses a risk, potential harm, or is menacing.

Joy

A feeling of great pleasure and happiness.

Frontal Lobe

The part of the brain located at the front of each cerebral hemisphere, responsible for executive functions, decision making, movement, and speech.