Use the Balance Sheet for the Following Questions

question 43

Multiple Choice

Use the balance sheet for the following questions.
Table 29-3

-Refer to Table 29-3. If the reserve requirement is 10 percent, what is the state of this bank?

• A)It can make a new loan of $18 000.
• B)It has less reserves than required.
• C)It has excess reserves of less than $8000.
• D)It has excess reserves of more than $8000.

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Definitions:

Low Down-payment Loans

Loan types that require a smaller initial payment from the borrower, often used in the context of home mortgages.

Interest Rate Policy

A component of monetary policy, often set by a central bank, that determines the level of interest rates to influence economic activity.

Federal Regulations

Rules set by the federal government to control and guide the practices of businesses, individuals, and other organizations within the country.

Mortgage Lending Standards

Criteria used by banks and financial institutions to determine the eligibility of borrowers for a mortgage.