Suppose a Bank Is Exactly Meeting Its Desired Reserve Ratio

question 25

Multiple Choice

Suppose a bank is exactly meeting its desired reserve ratio of 10 percent and a new deposit of $75,000 is made.Immediately after the deposit is made,the excess reserves will equal

• A)zero.
• B)$7,500.
• C)$67,500.
• D)impossible to determine given the limited information.

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Definitions:

Discharged Debt

A debt that has been fully paid off or legally settled, releasing the debtor from further obligations.

Bankruptcy

A legal process for individuals or businesses that cannot repay their outstanding debts, allowing them to be relieved of their debt obligations under the protection of law.

Industry Standards

Industry standards refer to the established norms and technical specifications followed by companies in a particular sector to ensure quality, safety, and interoperability.

Incomplete Contract

A contract that lacks certain terms and conditions or is ambiguous in its provisions, often leading to disputes or requiring external interpretation.