If a Bank Sells a $1,000 Security to the Fed

question 27

Multiple Choice

If a bank sells a $1,000 security to the Fed and the required reserve ratio is 20 percent, _____

• A) the bank has $1,000 in additional reserves, of which it can lend $800.
• B) the bank has $1,000 in additional reserves, of which it can lend $900.
• C) the bank has lost an asset and must reduce its loans.
• D) the bank has lost a liability.
• E) there is no change in excess reserves, since net assets do not change.

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Definitions:

Ova

The female reproductive cells in animals and plants; the plural of ovum.

X Sex Chromosome

One of the two sex chromosomes, X and Y, with individuals typically having two X chromosomes (XX) being genetically female and one X and one Y chromosome (XY) being genetically male.

Homozygous

Referring to an individual who has two identical alleles for a particular gene or genes, affecting their traits or conditions.

Mutations

changes in the DNA sequence of an organism's genome, which can result in variations in physical appearance, function, or behavior.