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:

United States

A country located primarily in North America, consisting of 50 states, a federal district, five major self-governing territories, and various possessions.

Differential Associations Theory

A theory in criminology suggesting that individuals learn deviant behavior from those close to them who provide models of and opportunities for deviance.

Pick-Pocketing

The act of stealthily stealing wallets or other valuables from the pockets or bags of others.

Wealthy

Having a large amount of money, resources, or assets; often associated with affluence and a high standard of living.