Suppose That a Bank Has $100 Million in Checkable Deposits

question 163

Multiple Choice

Suppose that a bank has $100 million in checkable deposits and the required reserve ratio is 0.1.If the bank has $5 million in excess reserves,then its actual reserves must be

• A)$0
• B)$5 million
• C)$10 million
• D)$15 million
• E)$20 million

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Definitions:

Profit Function

It describes a company's earnings or losses by relating total revenue to total costs, identifying the maximum profit available to a firm.

Price Elasticity

An assessment of the variation in the amount of a product that is either bought or sold, as a reaction to alterations in its cost.

Marginal Revenue

The extra revenue obtained by selling an additional unit of a product or service.

International Marketing Agreement

An arrangement between parties from different countries to promote and distribute a product or service globally.