Suppose a Bank Has $100 Million in Checking Account Deposits

question 81

Multiple Choice

Suppose a bank has $100 million in checking account deposits with no excess reserves and the required reserve ratio is 10 percent.If the Federal Reserve reduces the required reserve ratio to 4 percent,then the bank can make a maximum loan of

• A)$0.
• B)$4 million.
• C)$6 million.
• D)$10 million.

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Definitions:

Working Purpose Statement

A statement that outlines the main goals or objectives of a project or piece of work, guiding the focus and direction.

Critical Analysis

A process of evaluating an argument or piece of work in detail to assess its validity and relevance, often by breaking it down into its component parts.

Conduct Research

The systematic investigation into and study of materials, sources, etc., in order to establish facts and reach new conclusions.

Market Test

An experiment or survey conducted to gauge the potential success of a product or service in the marketplace.