Assume That a Bank Has $2,000 in Total Reserves and $10,000

question 96

Multiple Choice

Assume that a bank has $2,000 in total reserves and $10,000 in checkable deposits and the required reserve ratio on checkable deposits is 20%.This bank's excess reserves equal

• A)$500.
• B)$250.
• C)$750.
• D)zero.

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Definitions:

Schedule M-1

A form used by corporations filing U.S. federal corporate income taxes to reconcile financial statement income with tax return income.

Total Receipts

The total amount of money received by a business during a specific period, including sales, income, donations, and other forms of revenue.

Subchapter S Corporation

A type of corporation that meets specific Internal Revenue Code requirements and passes income, losses, deductions, and credits to its shareholders for federal tax purposes.

C Corporation

A legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity, leading to potential double taxation on earnings.