If a Bank Has $500 in Excess Reserves and the Reserve

question 44

Multiple Choice

If a bank has $500 in excess reserves and the reserve requirement is 20 percent, then the maximum amount by which this individual bank can increase the money supply is _____.

• A)$100
• B)$400
• C)$500
• D)$1, 000
• E)$2, 500

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Definitions:

Forgery

The act of falsely making or altering a document with the intent to defraud.

Rights Arising

Privileges or legal claims that originate from a specific source, such as a contract, employment relationship, or statute.

Negotiation

The process of discussing terms in order to reach a mutual agreement, often in the context of contracts or dispute resolutions.

Assignment

The transfer of rights, property, or responsibilities from one party to another, either permanently or temporarily.