A Bank Has $200 of Reserves and $4,000 of Deposits

question 27

Multiple Choice

A bank has $200 of reserves and $4,000 of deposits. It is just meeting its desired reserves and has no excess reserves. Thus the desired reserve ratio is

• A) 10 per cent.
• B) 5 per cent.
• C) $200.
• D) 25 per cent.
• E) 20 per cent.

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Definitions:

Mental Representations

Internal cognitive symbols, structures, or maps of the world that individuals use to understand and interact with their environment.

Subordinate-level

A specific, detailed level within a categorization hierarchy, often denoting a particular member of a larger group.

Basic-level

Refers to the most natural and preferred categorical level at which people classify and label objects, which balances specificity and generalization.

Superordinate-level

A term used in cognitive psychology to refer to a higher, more abstract category or level of classification.