Table 29-5. -Refer to Table 29-5. If the Bank Faces a Reserve

question 381

Multiple Choice

Table 29-5.
-Refer to Table 29-5. If the bank faces a reserve requirement of 6 percent, then the bank

• A)is in a position to make a new loan of $12,000.
• B)is in a position to make a new loan of $18,000.
• C)has excess reserves of $12,000.
• D)None of the above is correct.

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Definitions:

Disposable Income

This is the amount of money that households have available for spending and saving after income taxes have been accounted for.

Consumption

refers to the total amount of goods and services bought and used by households and individuals.

Savings Rate

The portion of disposable income not spent on consumption of goods and services but saved or invested, usually expressed as a percentage of disposable income.

Consumption

Consumption refers to the use of goods and services by households for personal satisfaction or living standards.