If a Bank Has $1,000,000 in Reserves and Checking Deposits

question 41

Multiple Choice

If a bank has $1,000,000 in reserves and checking deposits of $3,000,000, what is the bank's reserve position if the required reserve ratio is 20 percent?

• A)The bank has $500,000 of required reserves and $500,000 of excess reserves.
• B)The bank has $600,000 of required reserves and $400,000 of excess reserves.
• C)The bank has $400,000 of required reserves and $600,000 of excess reserves.
• D)The bank has $200,000 of required reserves and $800,000 of excess reserves.

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Definitions:

Material Size

Refers to the physical dimensions of a raw material or component before it is processed or machined into its final form.

Development Drawing

A detailed drawing that provides comprehensive information and specifications for the manufacturing or construction of a part or structure.

Tubular Or Cylindrical

Describes an object having a hollow or solid cylinder shape.

Gage

A device used for measurement or to determine conformity to a set of specifications, often used in manufacturing and engineering to ensure quality and precision.