Suppose the Required Reserve Ratio Is 0

question 102

Multiple Choice

Suppose the required reserve ratio is 0.1 and Linda deposits $4,000 in cash at the College State Bank.If the bank held no excess reserves before Linda's deposit and now increases its reserves by $500,which of the following is true?

• A)The bank must have lent out an additional $4,000.
• B)$500 is the value of the bank's required reserves.
• C)The bank now has excess reserves of $100.
• D)Both the bank's assets and its liabilities rise by $500.
• E)The bank now has $500 in excess reserves.

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Definitions:

Manipulated

Altered or controlled in a deliberate way, often to achieve a specific outcome or effect in research or other contexts.

Constant

A quality, value, or quantity that remains unchanged or stable within a given context or over time.

Non-Experimental

Research methods that do not involve manipulating variables to determine effects but instead observe naturally occurring relationships.

Experimental

Pertaining to a method of research that involves the manipulation of variables to establish cause and effect relationships.