Suppose a Bank Has $1,000,000 in Deposits,a Minimum Reserve Requirement

question 55

Multiple Choice

Suppose a bank has $1,000,000 in deposits,a minimum reserve requirement of 15 percent,and bank reserves of $170,000.Then the bank can make new loans in the amount of:

• A) $15,000
• B) $20,000
• C) $170,000
• D) $320,000

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Definitions:

Price Discount

A reduction from the original or standard price of a product or service, often used to stimulate sales or clear out inventory.

Lot Size Based

Pertains to the method of quantity determination for production or ordering, where items are processed or ordered in specific batch sizes to optimize production efficiency or cost.

Quantity Ordered

The specific amount of goods or services requested by a customer or required for a particular purpose or project.

Holding Cost

The expenses associated with storing inventory until it is sold or used, including storage, handling, insurance, and opportunity costs.