Dollar Bank Is Currently Loaned Up

question 22

Multiple Choice

Dollar Bank is currently loaned up. If the required reserve ratio is lowered,

• A) Dollar Bank's net worth will increase.
• B) Dollar Bank will have excess reserves that it can lend out.
• C) Dollar Bank will still be loaned up because it did not receive any additional deposits.
• D) Dollar Bank's actual reserves will increase, but it will still be loaned up.

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Definitions:

Indicator Variable

An indicator variable is a numerical variable used in statistics that adopts a value of 1 if a certain condition is met and 0 if it is not.

Binomial Probability

The probability of obtaining a fixed number of successful outcomes in a fixed number of trials in a binomial experiment.

Odds

The ratio of the probability of an event happening to the probability of it not happening; in gambling, it represents the amount won relative to the stake.

Unfriended

The act of removing someone from one's social networking friends list.