If a Bank Has $200,000 of Deposits,a Required Reserve Ratio

question 35

Multiple Choice

If a bank has $200,000 of deposits,a required reserve ratio of 20 percent,and $80,000 in reserves,then the maximum deposit outflow it can sustain without altering its balance sheet is

• A) $50,000.
• B) $40,000.
• C) $30,000.
• D) $25,000.

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Definitions:

Selling Services

The act of offering intangible products or skills to customers in exchange for payment.

Debit Side

The left side of an accounting ledger, where debit entries are recorded, typically indicating increases in assets or expenses, or decreases in liabilities or revenues.

Account

An accounting form used to record the increases and decreases in each financial statement item.

Stockholders' Equity

The portion of the capital of a company that belongs to the shareholders; it represents the residual assets of a company after debts and liabilities have been settled.