If the Banking System Has Demand Deposits of $200,000,total Reserves

question 108

Multiple Choice

If the banking system has demand deposits of $200,000,total reserves equal to $60,000,and a required reserve ratio of 25 percent,the banking system can increase the volume of loans by a maximum of

• A)$40,000.
• B)$60,000.
• C)$10,000.
• D)$200,000.

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Definitions:

High Average Returns

Refers to investments that consistently yield returns above the market or sector average over a period.

Equities

Equities represent an ownership interest in a company through shares of its stock, giving shareholders a claim on the company's assets and earnings.

Probability Distribution

A function in mathematics that determines the probability of each potential outcome in an experiment.

Expected Value

The anticipated value or outcome of a variable, computed as an average of all possible outcomes each weighted by its respective probability of occurrence.