Suppose Banks Desire to Hold No Excess Reserves and That

question 103

Multiple Choice

Suppose banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 10 percent. If you deposit $9,000 into First Jayhawk Bank,

• A)First Jayhawk's required reserves increase by $900.
• B)First Jayhawk will be able to lend out $8,100.
• C)First Jayhawk's assets and liabilities both will increase by $9,000.
• D)All of the above are correct.

---

Definitions:

Trade Deficit

A situation where a country's imports exceed its exports during a given time period, indicating a net outflow of domestic currency to foreign markets.

Trade Deficit

A situation where a country's imports of goods and services exceed its exports.

Excise Tax

A tax imposed on specific goods, services, and activities, such as gasoline, tobacco, and alcohol, often used to discourage their use and generate revenue.

Personal Income Tax

Tax imposed on individuals based on their income, including wages, salaries, and investment income.