A Bank Currently Has Checkable Deposits of $100,000, Total Reserves

question 216

Multiple Choice

A bank currently has checkable deposits of $100,000, total reserves of $30,000, and loans of $70,000. If the required reserve ratio is lowered from 20 percent to 15 percent, this bank can increase its loans by:

• A) $10,000.
• B) $15,000.
• C) $75,000.
• D) $5,000.
• E) $ 0.

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Definitions:

Smooth Muscle

A type of muscle found in the walls of internal organs, such as the stomach and intestines, that contracts involuntarily.

Skeletal Muscle

A type of muscle that is attached to bones and is involved in the mechanics of movement in the body.

Striated

Having stripes or lines, often referring to a type of muscle tissue that appears striped under a microscope.

Actin

A protein that is essential for the contraction of muscle cells and plays a role in various types of cell movement and structure.