If the Reserve Requirement Was 5% and a Bank Customer

question 115

Multiple Choice

If the reserve requirement was 5% and a bank customer makes a deposit of $1,000, the initial result would be:

• A)​a $950 increase in required reserves and a $50 increase in excess reserves.
• B)​a $20,000 increase in required reserves and a $950 increase in excess reserves.
• C)​a $50 increase in required reserves and a $20,000 increase in excess reserves.
• D)​none of the above

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Definitions:

Equitable Remedy

A court-ordered action that requires a party to take specific steps to correct a wrong, including injunctions and specific performance, distinguished from financial compensation.

Specific Performance

A contract remedy whereby the defendant is ordered to perform according to the terms of his contract.

Monetary Damages

Financial compensation awarded in civil lawsuits for loss or injury as a result of the defendant's actions.

Administrative Agencies

Government bodies responsible for implementing, administering, and enforcing regulations and statutes.