Table 16-4. -Refer to Table 16-4. Suppose the Bank Faces a Reserve

question 104

Multiple Choice

Table 16-4.
-Refer to Table 16-4. Suppose the bank faces a reserve requirement of 10 percent. Starting from the situation as depicted by the T-account, a customer deposits an additional $50,000 into his account at the bank. If the bank takes no other action it will

• A)have $65,000 in excess reserves.
• B)have $55,000 in excess reserves.
• C)need to raise an additional $5,000 of reserves to meet the reserve requirement ratio
• D)None of the above is correct.

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Definitions:

Economic Conditions

The state of the economy at a given time, including variables such as inflation, unemployment, and economic growth.

Significant Influence

The power to participate in the financial and operating policy decisions of another company, but not control them.

Voting Stock

Shares that give the holder the right to vote on corporate matters, such as electing the board of directors and approving corporate policies.

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An individual or entity that holds a significant portion of a company's shares or voting rights, granting them substantial influence or control over the company's decisions and policies.