Refer to the Information Provided in Table 10

question 297

Multiple Choice

Refer to the information provided in Table 10.5 below to answer the questions that follow.
Table 10.5
-Refer to Table 10.5. The required reserve ratio is 10%. If the Bloomington Bank is meeting its reserve requirement and has no excess reserves, its loans equal

• A) $1,080.
• B) $1,530.
• C) $1,580.
• D) $1,700.

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Definitions:

Lending

The act of providing funds to another party with the expectation that the funds will be repaid, often with interest, over a specified period of time.

Excess Reserves

Funds that banks hold over and above the legal requirements, which can influence their ability to lend.

Deposits

Funds placed into an account at a financial institution for safekeeping and to earn interest.

Excess Reserves

Excess reserves are the funds that banks hold over and above the required minimum reserves mandated by central banking regulations, often stored in central banks.