Assume a bank currently holds $75 million in demand deposits, $10 million in vault cash and $25 million deposited at the Federal Reserve. If the required reserve ratio is 15 percent, how much must the bank hold in required reserves?
a. $15.0 million
b. $3.75 million
c. $11.25 million
d. $16.5 million
e. $12.75 million.
C
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Refer to the table above. Which is the optimum location for the firm to set up its factory?
A) Far B) Close C) Very Far D) Very Close
If bus travel is an inferior good, then its income elasticity of demand will be:
a. strictly greater than one. b. positive. c. equal to zero. d. negative.
Savings deposits are included in
a. M1 but not M2. b. M2 but not M1. c. M1 and M2. d. neither M1 nor M2.
The Fed changes the reserve requirement sparingly because:
A. sudden changes of such a huge magnitude would have far-reaching, and sometimes undesirable, effects. B. it would cause uncertainty for banks and slow their rate of lending. C. very small changes cause very large overall changes to money supply due to the money multiplier. D. All of these are true.