Table 10-2 -Refer to the Table 10-2.If the Reserve Requirement Is 10

question 46

Multiple Choice

Table 10-2

-Refer to the Table 10-2.If the reserve requirement is 10 percent,what is the state of this bank?

• A)It can make a new loan of $18 000.
• B)It has less reserves than required.
• C)It has excess reserves of less than $8000.
• D)It has excess reserves of more than $8000.

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Definitions:

Opportunity Costs

The loss of potential gain from other alternatives when one alternative is chosen; the value of the next best choice.

Financial Investment

The purchase of a financial asset (such as a stock, bond, or mutual fund) or real asset (such as a house, land, or factories) in the expectation of financial gain.

Bank Certificate

A document issued by a bank certifying the deposit of money or financial instruments with a certain value.