When $1 Million Is Deposited at a Bank,the Required Reserve

question 14

Multiple Choice

When $1 million is deposited at a bank,the required reserve ratio is 20 percent,and the bank chooses not to make any loans but to hold excess reserves instead,then,in the bank's final balance sheet

• A)the assets at the bank increase by $1 million.
• B)the liabilities of the bank decrease by $1 million.
• C)reserves increase by $200,000.
• D)liabilities increase by $200,000.

---

Definitions:

Accounts Payable

A current liability account on the balance sheet representing amounts owed by a company to suppliers or creditors for goods and services purchased on credit.

Exchange Rate

The value of one currency for the purpose of conversion to another, dictating how much one currency is worth in terms of another.

Journal Entry

A record in the accounting journals that represents a business transaction, detailing debits and credits.

Yen

The official currency of Japan, used in financial transactions within the country and internationally.