Suppose a Bank Has $100,000 in Checking Account Deposits with No

question 119

Multiple Choice

Suppose a bank has $100,000 in checking account deposits with no excess reserves and the required reserve ratio is 5 percent.If the Federal Reserve lowers the required reserve ratio to 3 percent,then the bank will now have excess reserves of

• A)$0.
• B)$2,000.
• C)$3,000.
• D)$5,000.

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Definitions:

Closely Held Corporation

A business entity owned by a small group of shareholders where shares are not publicly traded and often involve family members.

Without Restriction

A term indicating that something can be used, accessed, or done freely without any limitations or conditions.

Creditors

Individuals or institutions to whom money is owed by debtors, or people who have borrowed money.

Shareholders

Individuals or entities who own one or more shares of stock in a corporation, making them partial owners of the company.