If Banks Desire to Hold No Excess Reserves,the Reserve Ratio

question 171

Multiple Choice

If banks desire to hold no excess reserves,the reserve ratio is 10 percent,and a bank that was previously just meeting its reserve requirement receives a new deposit of $400,then initially the bank has a

• A) $400 increase in excess reserves and no increase in required reserves.
• B) $400 increase in required reserves and no increase in excess reserves.
• C) $360 increase in excess reserves and $40 increase in required reserves.
• D) $40 increase in excess reserves and $360 increase in required reserves.

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Definitions:

Draining Blood

The process of removing blood from the body, typically done for medical reasons such as to relieve pressure from a hematoma or in therapeutic phlebotomy.

Diastolic Pressure

The lower number in a blood pressure reading, representing the pressure in the arteries when the heart rests between beats.

Systolic Pressure

The highest blood pressure measured in the arteries during the contraction phase of the heart cycle.

Korotkoff Sounds

Sounds heard over an artery when blood pressure is determined by the auscultatory method; caused by turbulent flow of blood.