The Manager of the Bank Where You Work Tells You

question 166

Multiple Choice

The manager of the bank where you work tells you that the bank has $400 million in deposits and $340 million dollars in loans. The Fed then raises the reserve requirement from 10 percent to 15 percent. Assuming everything else stays the same, how much is the bank holding in excess reserves after the increase in the reserve requirement?

• A)$0
• B)$20 million
• C)$40 million
• D)$60 million

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Definitions:

Incurred During

The phrase refers to costs or expenses that happen or accumulate within a specific period.

Promissory Note

A financial tool comprising a formal agreement where one entity commits to paying a specific amount of money to another entity, either upon request or at a predetermined date in the future.

Time Extension

An additional period of time given to complete a task or fulfill an obligation that extends beyond the original deadline.

Charge Customer

To bill a customer for goods or services provided, creating an obligation for payment.