If a Bank Has $10 Million of Deposits,a Required Reserve

question 67

Multiple Choice

If a bank has $10 million of deposits,a required reserve ratio of 10 percent,and $2 million in reserves,then it does not have enough reserves to support a deposit outflow of

• A) $1.2 million.
• B) $1.1 million.
• C) $1 million.
• D) either A or B of the above.

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Definitions:

Unusually High

A term describing values or quantities that significantly exceed the expected or average levels.

English Exam

An assessment tool used to evaluate an individual's grasp of the English language and its grammatical, written, and oral aspects.

Standard Deviation

A metric that calculates how much a collection of data points deviates or spreads out from the average value.

Normal Model

A probability distribution that is symmetric about its mean, showing that data near the mean are more frequent in occurrence than data far from the mean.