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:

Fit Distribution

The process of determining which probability distribution best matches a set of data.

Bootstrap Tool

A statistical method used for estimating the distribution of a statistic by resampling with replacement from the original data.

Lowest Average Profit

The minimum average profit realized over a specified period.

Purchase Quantity

The number of units of a product that consumers buy over a specified period.