If the reserve requirement was 5% and a bank customer makes a deposit of $1,000, the initial result would be:
a. a $950 increase in required reserves and a $50 increase in excess reserves.
b. a $20,000 increase in required reserves and a $950 increase in excess reserves.
c. a $50 increase in required reserves and a $20,000 increase in excess reserves.
d. none of the above
d
Economics
You might also like to view...
Excess reserves are put to use by a bank when it
a. puts cash in the vault to back existing loans. b. pays off the mortgage on its building. c. sells government securities. d. makes loans to its customers.
Economics
Refer to the figures. Which figure(s) represent(s) a situation where firms are likely to hold inventories to accommodate unexpected changes in demand?
A. A only.
B. B only.
C. Both A and B.
D. Neither A nor B.
Economics