If a Bank Has $200,000 of Checkable Deposits,a Required Reserve

question 73

Multiple Choice

If a bank has $200,000 of checkable deposits,a required reserve ratio of 20 percent,and it holds $80,000 in reserves,then the maximum deposit outflow it can sustain without altering its balance sheet is

• A)$50,000.
• B)$40,000.
• C)$30,000.
• D)$25,000.

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Definitions:

Annuity

An economic tool that delivers a stable flow of income to an individual, commonly employed in retirement planning strategies.

Discount Rate

The interest rate used to discount future cash flows to their present values, often reflecting the cost of capital or risk.

Perpetuity

A type of annuity that pays a fixed amount of money to an individual indefinitely, without a termination date.

Interest Rate

The percentage of principal charged by the lender for the use of its money or the rate earned on savings or investments.