Table 16-3 -Refer to Table 16-3

question 34

Multiple Choice

Table 16-3
$\begin{array}{|c|c|}\hline \text { Assets } & \text { Liabilities } \\\hline \text { Reserves }+\$ 7,000 & \text { Deposits }+\$ 50,000 \\\hline \text { Loans }+\$ 46,000 & \text { Net Worth }+\$ 3,000 \\\hline\end{array}$
-Refer to Table 16-3.Consider the above simplified balance sheet for a bank.If the required reserve ratio is 10 percent,the bank can make a maximum loan of

• A) $2,000.
• B) $5,000.
• C) $6,300.
• D) $45,000.

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Definitions:

Interest Rate

The percentage at which interest is paid by a borrower for the use of money they borrow from a lender.

Money Supply

The total amount of money available in an economy at a specific time, including cash, coins, and balances held in bank accounts.

Interest-Bearing Assets

Investments or savings that earn interest over time, such as bonds, savings accounts, or loans.

Interest Rate

The percentage of a sum of money charged for its use, determining the cost of borrowing money or the return on savings and investments.