Suppose Bank a Holds $200 of Reserves, Has Deposits of $1000

question 143

Multiple Choice

Suppose Bank A holds $200 of reserves, has deposits of $1000, and the desired reserve ratio is 15 percent. How many loans can Bank A create at Bank A?

• A) zero, because Bank A has no excess reserves
• B) $200
• C) $50
• D) $850

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Definitions:

Chebysheff's Theorem

A statistical theorem stating that for any data set or distribution, no matter the shape, a minimum proportion of values must lie within a certain number of standard deviations from the mean.

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, indicating how spread out the values are around the mean.

Sales Receipts

Documents that provide proof of a transaction between a buyer and a seller.

Geometric Mean

The geometric mean is a measure of central tendency that is calculated by taking the nth root of the product of n numbers, often used for rates and ratios.