If a Bank Has $1 Million in Demand Deposits, $350,000

question 69

Multiple Choice

If a bank has $1 million in demand deposits, $350,000 in reserves, and faces a 30 percent reserve requirement, the amount of money that a bank could initially create by loaning out their excess reserves is:

• A)​$50,000.
• B)​$300,000.
• C)​$350,000.
• D)​$700,000.

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Definitions:

Main Memory

The principal storage in a computer in which data and programs are temporarily stored for quick access by the processor.

Secondary Storage

A non-volatile storage medium used for keeping data permanently, as opposed to the volatile primary storage or main memory.

Input Device

A hardware component used to enter data or instructions into a computer system.

Compiler

A software tool that translates code written in a high-level programming language into a lower-level language or machine code that can be executed by a computer.