Assume the reserve requirement is 25 percent, demand deposits are $500 million, and total reserves are $32 million. If the reserve requirement is decreased to 20 percent, the banking system will experience
A. Excess reserves equal to $68 million.
B. Excess reserves equal to $32 million.
C. No change in the lending capacity.
D. A deficiency of required reserves equal to $68 million.
Answer: D
Economics
You might also like to view...
The longer the "pass-through" period following a devaluation, the faster the desirable balance of trade effects of a devaluation will appear on quantities traded
Indicate whether the statement is true or false
Economics
A monopoly that is maximizing profits operates in the ________ portion of the demand curve
A) unitary elastic B) elastic C) inelastic D) horizontal
Economics