Bank A has $25,000 in total reserves, and zero excess reserves. The required reserve ratio is 5 percent. Bank A has total deposits of
a. $1,250.
b. $25,000.
c. $250,000.
d. $5,000,000
Answer: d) $500,000
total deposits in the bank =required reserves/ required reserve ratio
=25000/0.05
=500000
The total deposits are $500.000
You might also like to view...
Some health insurance companies pay only 70%-80% of the medical cost incurred by their customers. What is the reason for this?
What will be an ideal response?
What does the study of the balance of international trade and finance between 1790 and 1860 help American economic historians do?
(a) Understand what the U.S. sold to the rest of the world (b) Understand what the rest of the world sold to the U.S. (c) Determine if there is a link between these international patterns and economic growth in the U.S. (d) All of the above
Refer to the above data. How many units of the two products will the consumer purchase?
A) 3 of L and none of M B) 4 of L and 2 of M C) 3 of L and 5 of M D) 2 of L and 3 of M
Which of the following is an outside incentive that forces managers to put forth maximal effort?
A. Performance bonuses B. Threat of takeovers C. Flat fees D. Revenue-sharing contracts