Suppose a Bank Has $100 Million in Chequable Deposits and the Desired

question 107

Multiple Choice

Suppose a bank has $100 million in chequable deposits and the desired reserve ratio is 0.1.And suppose the bank has $5 million in excess reserves.What is the maximum amount the bank can lend?  

• A) $0 
• B) $5 million 
• C) $10 million 
• D) $15 million

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Definitions:

Tories

Originally a term for a political faction in Great Britain, often associated with conservatism and the defense of the monarchy against reformist pressures.

Whigs

The Whigs were a political faction and then a political party in the parliaments of England, Scotland, Great Britain, Ireland, and the United Kingdom, active between the 17th and 19th centuries, promoting constitutional monarchism and parliamentary power.

Monarch

A sovereign head of state, especially a king, queen, or emperor, who usually inherits their position by birth.

Parliament

A form of government in which the supreme power is vested in an assembly of elected representatives who are responsible for making laws, often featuring two houses (bicameral) or one house (unicameral).