Suppose a Transaction Changes the Balance Sheet of Wells Fargo

question 12

Multiple Choice

Suppose a transaction changes the balance sheet of Wells Fargo bank as indicated in the following T-account.
$\begin{array}{|c|c|}\hline \text { Assets } & \text { Liabilities } \\\hline \text { Reserves }+\$ 1,000 & \text { Deposits }+\$ 1,000 \\\hline\end{array}$
At this point,what percentage of the new deposits does Wells Fargo hold in reserves?

• A) 100 percent
• B) 10 percent
• C) 5 percent
• D) 1 percent

---

Definitions:

Inelastic Demand

A situation where the demand for a good or service is not significantly affected by changes in its price.

Downward-Sloping

A term often used to describe demand curves, indicating that as the price decreases, the quantity demanded increases.

Linear Demand Curve

A graphical representation of the relationship between the price of a good and the quantity demanded, characterized by a consistent negative slope.

Elastic Demand

A demand relationship in which the percentage change in quantity demanded is larger than the percentage change in price in absolute value (a demand elasticity with an absolute value greater than 1).