Suppose That Banks Desire to Hold No Excess Reserves

question 79

Multiple Choice

Suppose that banks desire to hold no excess reserves.If the reserve requirement is 5 percent and a bank receives a new deposit of $400,it

• A) must increase required reserves by $20.
• B) will initially see reserves increase by $400.
• C) will be able to use this deposit to make new loans amounting to $380.
• D) All of the above are correct.

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Definitions:

Personality Development

The pattern of growth and change in individual characteristics throughout life.

Basic Biological Needs

Basic biological needs are the fundamental physiological requirements that all living beings must satisfy to survive, including nutrition, hydration, sleep, and safety.

Basic Biological Needs

Fundamental physiological requirements for human survival, including food, water, shelter, and oxygen.

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Secure and healthy emotional bonds formed between individuals, especially during infancy with caregivers.