Assume that the reserve requirement is 20 percent. First National Bank has vault cash and deposits with the Fed of $80 million, loans and securities of $320 million, and demand deposits of $400 million. First National:
a. could extend a maximum of $40 million of additional loans.
b. could extend a maximum of $20 million of additional loans.
c. could extend a maximum of $10 million of additional loans.
d. is not in a position to extend additional loans.
d
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Consider a BMW automobile plant. If the price of BMWs increase by 10 percent and the money wage rate and other costs ________, there will be ________
A) increase by 10 percent; an increase in BMWs profits B) do not change; an increase in BMW's production and profit C) increase by 10 percent; an increase in BMWs production D) do not change; no change in production
Suppose a perfectly competitive firm is in long-run equilibrium and there is a decrease in demand
Suppose also that the firm operates in an industry in which the prices of productive inputs vary with the level of output, increasing when output increases and decreasing when output decreases. Which of the following will occur at the new long-run equilibrium? A) Price will be lower than it was at the initial long-run equilibrium. B) Price will be the same as it was at the initial long-run equilibrium. C) Price will be higher than it was at the initial long-run equilibrium. D) The industry supply function will shift to the right.