The Desired Reserve Ratio Is 10 Percent

question 232

Multiple Choice

The desired reserve ratio is 10 percent.Joe deposits $1,000 in Bank A.Bank A keeps its minimum desired reserves and lends the excess to Fred.Fred spends his loan at J.C.Penney.J.C.Penney deposits the check it receives from Fred in Bank B.Bank B keeps its minimum desired reserves and lends the excess to Mary.How much can Bank B lend to Mary?

• A)$900
• B)$90
• C)$810
• D)$100
• E)$1,000

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Definitions:

Established Patterns

Predefined or widely recognized ways in which processes, behaviors, or activities are conducted within a particular context.

Bureaucratic Social Structures

Organized systems of administration in societies or organizations, characterized by hierarchical positions and written rules.

Behavior

The actions or reactions of an object or organism, usually in relation to the environment or surrounding.

Breakdown Theory

A sociological theory suggesting that social breakdown and disorganization lead to the emergence of deviant behavior and social problems.