Suppose That a Bank Has $100 Million in Checkable Deposits

question 30

Multiple Choice

Suppose that a bank has $100 million in checkable deposits and the required reserve ratio is 0.1.Required reserves are

• A)$1 million
• B)$5 million
• C)$10 million
• D)$50 million
• E)$100 million

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Definitions:

Depositary Bank

A financial institution that holds and manages the deposits of securities, facilitating the exchange and protection of securities certificates.

Indorsement

A legal term referring to the signing of a document, usually on its back, for the purpose of transferring rights to another individual.

Executory Promise

A commitment in a contract that has not yet been fulfilled or carried out by one or both parties.

Negotiable Instrument

A written promise certifying the payment of a certain sum of money, either upon request or at a predetermined date, with the document specifying the individual responsible for payment.