Suppose the Banking System Currently Has $400 Billion in Reserves

question 222

Multiple Choice

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 10 percent, and excess reserves are $3 billion. What is the level of loans?

• A)$3,603 billion
• B)$3,600 billion
• C)$3,573 billion
• D)$3,570 billion

---

Definitions:

Temptation

An urge or desire to perform an action that may be beneficial in the short term but is generally considered unwise or detrimental to long-term goals.

Behavioral Economists

Economists who study the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions and the consequences for market prices, returns, and resource allocation.

Decision Making

The process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.

Behavioral Economist

An expert who studies the effects of psychological, cognitive, emotional, cultural, and social factors on economic decisions by individuals and institutions.