Only One Commercial Bank in the Banking System Has an Excess

question 55

Multiple Choice

Only one commercial bank in the banking system has an excess reserve, and its excess reserve is $400,000.This bank makes a new loan of $300,000 and keeps an excess reserve of $100,000.If the required reserve ratio for all banks is 12.5 percent, the potential expansion of the money supply from this new loan is

• A)$37,500.
• B)$300,000.
• C)$2.4 million.
• D)$3.2 million.

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Definitions:

Psychotherapy

A treatment method that involves talking with a therapist to address and heal psychological problems.

Bipolar Disorder

A mental disorder marked by extreme mood swings, including emotional highs (mania or hypomania) and lows (depression).

Cognitive Therapy

A type of psychotherapy that addresses negative patterns of thought and challenges cognitive distortions to improve psychological well-being.

Maladaptive Assumptions

Irrational beliefs or thought patterns that are often negative and counterproductive, affecting one's mental health and actions.