If a Bank's Desired Reserve-Deposit Ratio Is 0

question 47

Multiple Choice

If a bank's desired reserve-deposit ratio is 0.33 and it has deposit liabilities of $100 million and reserves of $50 million, it:

• A)has too few reserves and will reduce its lending.
• B)has too many reserves and will increase its lending.
• C)has the correct amount of reserves and outstanding loans.
• D)should increase the amount of its reserves.

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