Assume That a Bank Has $2 Million in Reserves and Checkable

question 178

Multiple Choice

Assume that a bank has $2 million in reserves and checkable deposits of $10 million and the required reserve ratio on checkable deposits is 20%.The maximum amount of new loans this bank can make is

• A)$500,000.
• B)$1 million.
• C)$200,000.
• D)zero.
• E)$700,000.

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Definitions:

Partialed Out

A statistical process of removing the effect of one or more variables to better understand the relationship between other variables.

Correlation Drops

Occurs when the strength or consistency of the relationship between two variables decreases, signifying a change in how closely they are related.

Original Correlation

The initial statistical relationship observed between two variables before any manipulation or control is applied.

Multiple Correlation

A statistical measure representing the relationship between one dependent variable and two or more independent variables.