Suppose the Banking System Currently Has $400 Billion in Reserves

question 114

Multiple Choice

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits?

• A)$5,000 billion
• B)$4,937.5 billion
• C)$5,062.5 billion
• D)$4,995 billion

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Definitions:

Iroquois

A historically powerful northeast Native American confederacy, also known as the Haudenosaunee, made up of six nations including the Mohawk, Seneca, Cayuga, Onondaga, Oneida, and Tuscarora.

Patroonship

A grant of land and associated privileges given to wealthy individuals by the Dutch government in the 17th century to promote settlement and economic development in New Netherland (now parts of New York and New Jersey).

New Netherland

A 17th-century colonial province of the Dutch Republic that included parts of what are now the eastern United States.

Agricultural Labor

Work involved in cultivating and harvesting crops and raising animals, often performed by farmworkers and laborers.