Suppose the Banking System Has $100,000 in Outstanding Deposits and Actual

question 120

Multiple Choice

Suppose the banking system has $100,000 in outstanding deposits and actual reserves of $35,000.If the required reserve ratio is 10% and individuals hold no cash,the maximum amount the banking system can now add to the money supply is

• A) $25,000.
• B) $35,000.
• C) $250,000.
• D) $1,000,000.
• E) $1,500,000.

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Definitions:

Balance Per Bank

The amount of money in a company's bank account according to the bank's records at a specific point in time.

Bank Reconciliation

The procedure of reconciling the balance figures in a firm's accounting ledger for a cash account with the associated entries on a bank statement.

Segregation Of Duties

An internal control measure that divides responsibilities among different people to prevent fraud and errors.

Treasurer

An officer of an organization responsible for managing the institution’s budget, overseeing its investment strategy, and handling its financial planning, reporting, and record-keeping.