Suppose the Reserve Requirement Is 20 Percent

question 205

Multiple Choice

Suppose the reserve requirement is 20 percent. If a bank has checkable deposits of $4 million and actual reserves of $1 million, it can safely lend out

• A) $1 million.
• B) $1.2 million.
• C) $200,000.
• D) $800,000.

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Definitions:

Recordkeeping

The practice of maintaining and preserving records or documents detailing an organization's or individual's activities and transactions.

Bronze Metallurgy

The practice and knowledge involved in producing bronze, an alloy of copper and tin, used in tools, weapons, and sculptures in ancient times.

Warfare

The engagement in or activities associated with armed conflict between countries or groups.

Farming

The practice of cultivating plants and livestock to produce food, fiber, medicinal plants, and other products to sustain and enhance life.