The Manager of the Bank Where You Work Tells You

question 64

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 5 percent to 10 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:

Coxal Bone

Another term for the hip bone, which is a large, flat bone overlying the hip joint on each side of the human pelvis.

Growth Plate

A shaft of cartilage between the epiphysis and the diaphysis; also known as the epiphyseal disk.

Epiphysis

The rounded end of a long bone, which is separated from the main bone body by a growth plate in children and adolescents.

Diaphysis

The main or mid section (shaft) of a long bone, which is typically cylindrical in shape and contains the bone marrow and growth plates.