If a Bank Has $100,000 of Demand Deposits, a Desired

question 66

Multiple Choice

If a bank has $100,000 of demand deposits, a desired reserve ratio of 20 percent, and it holds $40000 in reserves, then the maximum deposit outflow it can sustain without altering its balance sheet is ________.

• A) $30000
• B) $25000
• C) $20000
• D) $10000

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Definitions:

Assessed

Evaluated or estimated, often in the context of determining the value for tax purposes.

Value

The monetary, material, or assessed worth of an asset, good, or service.

Fraction

A mathematical expression representing a part of a whole or a division of quantities.

Percentage Form

A way to express a number as a fraction of 100.