Suppose a Bank Has Demand Deposits of $2, 500, Excess

question 16

Multiple Choice

Suppose a bank has demand deposits of $2, 500, excess reserves of $125, and a reserve requirement of 25 percent.What is the loss in the money expansion process of the whole banking system if the bank decides to lend out only $100?

• A)$100
• B)$150
• C)$200
• D)$400
• E)$500

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Definitions:

Service Recovery Process

Involves actions a company takes to rectify a failed service, aiming to restore customer satisfaction and loyalty following service failures or complaints.

Three Fs

The term "Three Fs" refers to Friends, Family, and Fools, often mentioned as the initial source of funding for start-ups and small businesses.

Orphan

A child who has lost both parents through death or, in some definitions, a child who has lost one parent.

Account Penetration

The process of deepening relationships with existing customers by selling more products or services.