1) Mr. Jones deposited $10,000 cash into his account at Bank A. If the required
ID: 1202184 • Letter: 1
Question
1) Mr. Jones deposited $10,000 cash into his account at Bank A. If the required reserve ratio is 10%, Bank A has to keep _____in the form of required reserves and can make a loan equal to_____.
a. $500, $9,500
b. $1,000; $10,000
c. $1,000; $9,000
d, $10,000; $0
2. If the required reserve ratio is $20, the banking system has total reserves in the amount of $40 billion, there are no currency leakages, and each bank makes loans until excess reserves equal zero, then total checkable deposits for the banking system will equal:
a. $20 billion
b. $40 billion
c. $200 billion
d. $400 billion
3. If the required reserve ratio decreases from 12.5 percent to 10 percent:
a. potential deposit expansion decreases.
b. potential deposit expansion increases.
c. the simple deposit multiplier decreases from 12.5 to 10
d. the simple deposit multiplier increases from 10 to 12.5
Explanation / Answer
1) c. $1,000; $9,000.
2) c. $200 billion.
3) b. potential deposit expansion increases.
*****
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.