Suppose All Banks Are Subject to a Uniform Reserve Requirement

question 64

Multiple Choice

Suppose all banks are subject to a uniform reserve requirement of 20 percent and that the First National Bank has no excess reserves.If a new customer deposits $50,000,the bank could extend new loans up to a maximum of

• A)$10,000.
• B)$40,000.
• C)$50,000.
• D)$250,000.

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Definitions:

Opposite Charges

Charges that have different electrical signs, one positive and one negative, which attract each other.

Valence Shell

The outermost shell of an atom that contains the electrons most involved in chemical reactions.

Atom

The smallest unit of a chemical element, consisting of a nucleus of protons and neutrons, surrounded by electrons.

Negative Charge

A type of electrical charge characterized by the presence of more electrons than protons in an atom or molecule.