Suppose That Banks Desire to Hold No Excess Reserves

question 102

Multiple Choice

Suppose that banks desire to hold no excess reserves.If the reserve ratio is 5 percent and a bank receives a new deposit of $400,it

• A)must increase required reserves by $380.
• B)will initially see reserves increase by $380.
• C)will be able to use this deposit to make new loans.
• D)None of the above is correct.

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Definitions:

Role Conflict

A situation in which an individual faces competing expectations from different roles they occupy in society, causing stress or dilemmas.

Role Strain

The stress or tension experienced by an individual when conflicting demands are made on the person within the same role.

Role Inconsistency

The conflict or strain experienced by an individual when the expectations of different roles they occupy clash or are incompatible.

Social Rank

The position or standing of an individual or group within the social hierarchy of a society.