If a Bank Has $50,000 in Excess Reserves at the End

question 87

Multiple Choice

If a bank has $50,000 in excess reserves at the end of a business day and the required reserve ratio is 20 percent,the bank can increase its profits by:

• A)keeping the excess reserves.
• B)loaning out $40,000.
• C)loaning out $50,000 to another bank.
• D)borrowing $50,000 to remove the excess reserves.
• E)keeping $10,000 and depositing $40,000 with the Fed.

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Definitions:

Hemiplegia

A condition resulting in weakness or paralysis on one side of the body, typically caused by brain damage.

Paraplegia

A condition involving the paralysis of the legs and lower body, typically caused by spinal cord injury or disease.

Quadriplegia

A condition resulting in paralysis of all four limbs, typically caused by a spinal cord injury.

Aphagia

The inability or refusal to swallow, resulting in an inability to consume solid food.