If Actual Cash Reserves in the Banking System Are $8,000

question 188

Multiple Choice

If actual cash reserves in the banking system are $8,000, demand deposits are $70,000, and the desired reserve ratio is 10 percent, then excess reserves:

• A)are zero.
• B)are $1,000.
• C)are $2,000.
• D)cannot be determined from this information.

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Definitions:

Fault

A legal term often used in negligence cases, referring to responsibility or blame for an accident or misdeed.

Injury

A physical or emotional harm caused by an accident, disease, or deliberate act.

Strictly Liable

Being legally responsible for damages or harm caused, regardless of negligence or intent.

Manufacturing Defects

Flaws or errors in a product resulting from the manufacturing process which potentially harm consumers or differ from intended design.