Use the Following Balance Sheet for the ABC National Bank

question 82

Multiple Choice

Use the following balance sheet for the ABC National Bank in answering the question.Assume the required reserve ratio is 20 percent.
$\begin{array}{c}\begin{array}{lll}\quad\quad\quad\underline{\text { Assets}}\\\text { Reserves}\\\text { Securities}\\\text { Loans}\\\text { Property} \end{array}\begin{array}{l}\\\$ 27,000 \\50,000 \\33,000 \\200,000\end{array}\begin{array}{lll}\quad\quad \underline{\text { Liabilities \& Net Worth }}\\\text { Checkable Deposits}\\\text { Stock Shares}\\\\\\\end{array}\begin{array}{lll}\\\$1,100\\200,000\\\\\\\end{array}\end{array}$




Refer to the data.If the original balance sheet was for the commercial banking system,rather than a single bank,loans and checkable deposits could have been expanded by a maximum of:

• A) $8,000.
• B) $15,000.
• C) $48,000.
• D) $25,000.

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Definitions:

Specialization

The process of focusing resources on the production of one or a few goods and services to increase efficiency.

Exchange

The process of exchanging one item for another, particularly one of similar type or value.

Production Possibilities

The various combinations of goods and services that can be produced within an economy given the available resources and technology.

United States

The United States is a country located in North America, characterized by a federal republic governance structure and a highly developed mixed economy.