If the Reserve-Deposit Ratio Is 5% and the Banking System

question 61

Multiple Choice

If the reserve-deposit ratio is 5% and the banking system receives an additional $10 million in reserves,bank deposits will increase by

• A) $4 million.
• B) $10 million.
• C) $40 million.
• D) $200 million.
• E) $400 million.

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Definitions:

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The risk of loss associated with a particular asset, different from market risk.

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A stock market index of 60 large companies listed on the Toronto Stock Exchange, representing leading sectors in Canada.

Alcan

Alcan was a Canadian mining company and manufacturer of aluminum products, which became part of Rio Tinto Alcan after its acquisition.