Bank West's Balance Sheet

question 104

Multiple Choice

Bank West's Balance Sheet
Assets Liabilities
Cash $500 Deposits $20 000
Deposits at Bank of Canada $700 Capital $1 000
Loans and Mortgages $19 800 $21 000
$21 000
TABLE 26-3
-Refer to Table 26-3.Assume that Bank West is operating at its target reserve ratio and has no excess reserves,and that all commercial banks have the same target reserve ratio.If a new deposit to the Canadian banking system of $1500 is deposited at Bank West,the total new deposits created in the banking system can be calculated as follows:

• A)1500/0.06 = $25 000.
• B)1500/0.025 = $60 000.
• C)1500/0.024 = $62 500.
• D)2000/0.025 = $80 000.
• E)2000/0.06 = $33 333.

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