Suppose a Bank Has a Desired Reserve Requirement Ratio of 12

question 254

Multiple Choice

Suppose a bank has a desired reserve requirement ratio of 12 percent. If someone deposits $1,000 in the bank

• A) immediately after the deposit, excess reserves increase by $880.
• B) the bank can make loans of $1,000.
• C) the bank's desired reserves rise by $1,000.
• D) Both answers B and C are correct.

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Definitions:

Statement Of Comprehensive Income

A financial statement that presents a company's total income, including items that are not included in the net income.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenues, a key indicator of a company's profitability.

Interest Expense

The financial cost experienced by an entity over a duration for utilizing borrowed money.

Sources And Uses Of Cash

A financial statement that summarizes where a business obtained its money (sources) and how it spent it (uses).