Suppose a Bank Has $100,000 in Deposits,a Minimum Reserve Requirement

question 116

Multiple Choice

Suppose a bank has $100,000 in deposits,a minimum reserve requirement of 5 percent,and bank reserves of $12,000.Then it can make new loans in the amount of:

• A) $12,000
• B) $7,000
• C) $5,000
• D) $2,000

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Definitions:

Causal Mechanisms

The processes or pathways through which an outcome is brought about, explaining how cause and effect are linked.

James Coleman's Theory

Refers to the sociological and educational theories developed by James S. Coleman, notably his work on social capital and its effect on education and society.

Homo Economicus

An idealized concept in economic theory of humans as rational and narrowly self-interested actors who have the ability to make judgments toward their subjectively defined ends.

James Coleman

An American sociologist known for his work in education, public policy, and social theory, particularly the concept of social capital.