Suppose All Banks Are Subject to a Uniform Reserve Requirement

question 125

Multiple Choice

Suppose all banks are subject to a uniform reserve requirement of 20 percent and that the Union Bank has no excess reserves. If a new customer deposits $50,000, the bank could extend new loans up to a maximum of

• A) $10,000.
• B) $40,000.
• C) $50,000.
• D) $250,000.

---

Definitions:

QuickBooks

An accounting software package developed and marketed for small and medium-sized businesses, offering various financial management tools.

Closing Periods

The process of ending an accounting period by finalizing entries in the general ledger and preparing for a new financial period.

Accounting Periods

Time intervals at the end of which a company prepares financial statements, commonly monthly, quarterly, or annually.

Objectives

Clear, measurable goals that an individual or organization aims to achieve within a specific timeframe.