A Bank's Actual Reserves Can Be Calculated By

question 73

Multiple Choice

A bank's actual reserves can be calculated by:

• A)​multiplying its demand deposits by the required reserve ratio.
• B)​multiplying its excess reserves by the required reserve ratio.
• C)​subtracting its required reserves from its excess reserves.
• D)​adding its required reserves and its excess reserves.

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Definitions:

Amortization

The method of systematically amortizing the initial value of a non-physical asset over its estimated useful lifespan.

Pension Expense

The cost recognized by an employer for maintaining a defined benefit retirement plan for its employees.

Service Cost

The portion of the pension expense that is attributed to the current year's service, representing the present value of benefits earned by employees during the year.

Pension Trustee

An individual or organization that holds and manages the assets of a pension fund on behalf of its beneficiaries.