If a Bank Had a Desired Reserve Ratio of 10

question 20

Multiple Choice

If a bank had a desired reserve ratio of 10 percent and excess reserves of $2000,what is the largest loan it could extend?

• A)$200
• B)$1800
• C)$2 000
• D)$20 000

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Definitions:

Pure Monopolist

A single seller in a market with no close substitutes for the product, resulting in complete market control.

Pure Competitor

A market participant in an industry where many sellers offer identical products, and no single seller can influence market price.

Monopolistically Competitive

A market structure where many firms sell products that are similar but not identical, allowing for competition on factors other than price.

Product Differentiation

The method of making a product or service stand out from the competition to appeal more to a specific target audience.