If a Bank That Desires to Hold No Excess Reserves

question 65

Multiple Choice

If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 15 percent receives a deposit of $600,it has a

• A)$600 increase in excess reserves and no increase in required reserves.
• B)$600 increase in required reserves and no increase in excess reserves.
• C)$510 increase in excess reserves and a $90 increase in required reserves.
• D)$90 increase in excess reserves and a $510 increase in required reserves.

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Definitions:

Nondiscriminating Monopolist

A monopolist who charges all consumers the same price for its product regardless of the consumer's willingness or ability to pay more.

Price Discriminate

The strategy of selling the same product to different customers at different prices based on what the seller believes each customer is willing to pay.

Marginal Revenue Curve

A graphical representation that shows how marginal revenue varies as output level changes, typically downward sloping for firms in competitive markets.

Demand Curve

A chart that displays how the cost of an item correlates with the amount of that item buyers are prepared to buy at different price levels.