A-1 Bank Initially Has No Excess Reserves

question 306

Multiple Choice

A-1 bank initially has no excess reserves.If the desired reserve ratio is 10 percent and a new deposit of $10,000 is made in A-1,then A-1

• A)is required to hold the deposit in its reserves.
• B)can immediately loan a multiple of the $10,000.
• C)can immediately loan $9,000.
• D)can immediately loan $100,000.
• E)can immediately loan $10,000.

Recognize the short-run and long-run effects of monetary policy on the economy.

Differentiate between real and nominal variables and their significance.

Understand the relationship between output, unemployment, and the business cycle.

Grasp the reasons behind the shapes of the aggregate demand and aggregate supply curves.

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Definitions:

Ledger

A comprehensive collection of a company's financial accounts, where all transactions are recorded.

Transactions

Acts of buying, selling, transferring, or exchanging goods, services, or funds between two or more parties.

Fiscal Year

A one-year period chosen for accounting purposes, which may or may not align with the calendar year.