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:

Ethnic Groups

Communities or populations sharing a common cultural background, ancestral lineage, language, or social experience.

Prejudice

A preconceived opinion or bias against someone or something without sufficient knowledge, thought, or reason.

Mirror-Image Perceptions

A psychological concept where parties in conflict each view themselves as ethical and peaceful and view the opposing side as evil or aggressive.

Silence

The absence of any sound or noise; a state or condition marked by a lack of audible sound or communication.