If a Bank Has Deposits of $10,000 and Reserves of $5,000

question 155

True/False

If a bank has deposits of $10,000 and reserves of $5,000 and if the reserve requirement is 20%, its excess reserves are $3,000.

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Definitions:

At-risk Amount

The maximum amount of money an investor in certain activities can claim as a deduction or loss, limited to the actual cash, property, or borrowed amounts for which they are personally at risk.

Income Items

Various types of earnings, from employment, investments, or other sources, that must be reported on a tax return.

Investor

An individual or institution that allocates capital to investments with the expectation of receiving financial returns.

Materially Participate

Regular, continuous, and substantial involvement in business operations, determining if a tax loss is passive or nonpassive.