If Bulge Bank has a desired reserve ratio of 10 percent, loans of $25,000, deposits of $100,000, vault cash of $10,000, and reserves at the Fed of $65,000, then the bank
A) has no remaining capacity to make loans.
B) does not have enough reserves to meet its requirement.
C) has excess reserves of $65,000.
D) has excess reserves of $55,000.
E) has excess reserves of $75,000.
C
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The author of An Inquiry Into the Nature and Causes of the Wealth of Nations was
A) Duncan Bradstreet. B) Dow Jones. C) John Maynard Keynes. D) Karl Marx. E) Adam Smith.
A tax on firms for polluting will be most effective in reducing pollution at low cost if the tax
A) is levied on a one-time, lump-sum basis. B) per unit of pollutant is constant. C) per unit of pollutant is lower for low polluting firms. D) per unit of pollutant is proportioned to profits or ability to pay.
For the period 1947-2012, the behavior of the U.S. money supply is best characterized as
A) nearly constant over time. B) somewhat smoother than GDP. C) somewhat more volatile than GDP. D) extremely volatile and unstable.
Drivers with auto insurance being more likely to act carelessly is an example of:
A. adverse selection. B. moral hazard. C. asymmetric selection. D. information optimization.