Suppose All Banks Are Subject to a Uniform Reserve Requirement

question 79

Multiple Choice

Suppose all banks are subject to a uniform reserve requirement of 20 percent and that the Gamblers Last Chance Bank of Las Vegas has zero excess reserves. If a new customer deposits $10,000, the bank can now extend new loans up to a maximum of:

• A)$2,000.
• B)$8,000.
• C)$10,000.
• D)$50,000.
• E)$3,000.

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Definitions:

Creditors

Individuals or organizations to whom money is owed by debtors.

Petition

A formally drafted plea, often endorsed by numerous individuals, urging those in power to consider a specific issue.

Bankrupt Estate

The total assets of a person or entity that are available for distribution among creditors after declaring bankruptcy.

Proof of Claim

A written statement filed by a creditor in a bankruptcy case stating the amount owed by the debtor.