If a Bank Has $100,000 in Checkable Deposits, Reserves of $20,000

question 47

Multiple Choice

If a bank has $100,000 in checkable deposits, reserves of $20,000, and no excess reserves, then the required reserve ratio is:

• A) 10 percent.
• B) 20 percent.
• C) 25 percent.
• D) 30 percent.
• E) 50 percent.

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Definitions:

Lower Cost

The strategy or condition of achieving a reduction in expenses, leading to a competitive pricing advantage or higher profit margins.

Cost Focus

A business strategy aiming to become the lowest-cost producer in an industry for a particular segment or niche.

Generic Business Strategy

A basic framework for a business approach focusing on cost leadership, differentiation, or focus/niche to achieve competitive advantage.

Cost Focus

A business strategy that aims to become the lowest-cost producer in an industry or market segment to gain a competitive advantage.