If a Bank Gets a $100 000 New Deposit,chooses to Lend

question 128

Multiple Choice

If a bank gets a $100 000 new deposit,chooses to lend out $75 000,and increases its excess reserves by $5000 at the same time,what is the desired reserve ratio?

• A)5 percent
• B)20 percent
• C)25 percent
• D)30 percent

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Definitions:

Nominal GDP

The market value of all finished goods and services produced within a country in a year, not adjusted for inflation.

Real GDP

The total value of all goods and services produced by a country adjusted for inflation, providing a more accurate measure of economic output over time.

Intermediate Goods

Products that are used as inputs in the production of other goods or services and are not final products themselves.

GDP

Gross Domestic Product (GDP) measures the total monetary value of all goods and services produced over a specific time period within a country's borders.