If a Bank Had Demand Deposits of $80 Million and It

question 30

Multiple Choice

If a bank had demand deposits of $80 million and it faced a 25 percent required reserve ratio, it would be able to have a maximum amount of how many dollars worth of loans?

• A)​$20 million
• B)​$40 million
• C)​$60 million
• D)​$80 million

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Definitions:

Checking Account

A bank account that allows for the deposit and withdrawal of funds, typically using checks, debit cards, and electronic transfers, intended for daily transactions.

Cashier's Check

A check issued by a bank or financial institution, guaranteed by the bank itself, used for making large payments where the payee requires assurance of payment.

Certified Check

A certified check is a type of check for which the issuing bank guarantees the availability of funds by verifying that enough money exists in the check writer's account to cover the check.

Written Order

A formal, documented directive given by a court, employer, or another authoritative entity.