The Following Table Is the Consolidated Balance Sheet for the Commercial

question 68

Multiple Choice

The following table is the consolidated balance sheet for the commercial banking system. All figures are in billions. Assume that the required reserve ratio is 10 percent: Refer to the above information. If there is a deposit of $10 billion of new currency into checking accounts in the banking system, excess reserves will increase by:

• A) $1 billion
• B) $2 billion
• C) $9 billion
• D) $10 billion

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Definitions:

Net Income

The income a business retains after subtracting all costs and taxes from its gross revenue.

Equity Method

An accounting technique used by companies to record their investments in other companies, reflecting the financial performance proportionally in their own accounts.

Buildings Account

An account that records the costs associated with a company's buildings, including purchase price, construction costs, and improvements.

Unamortized Patent

The portion of a patent's cost that has not yet been expensed against earnings over its useful life.