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If reserves in the banking system increase by $200, then chequable deposits will increase by
$500 in the simple model of deposit creation when the desired reserve ratio is ____.
A) 0.04
B) 0.25
C) 0.40
D) 0.50
Answer: C
Diff: 1 Type: MC Page Ref: 388
Skill: Applied
Objective List: 16.4 Utilize a simple model of multiple deposit creation, showing how the
central bank can control the level of deposits by setting the level of reserves
If a bank has excess reserves of $10,000 and demand deposit liabilities of $80,000, and if the
reserve requirement is 20 percent, then the bank has actual reserves of ____.
A) $16,000
B) $20,000
C) $26,000
D) $36,000
Answer: C
Diff: 2 Type: MC Page Ref: 387 - 388
Skill: Applied
Objective List: 16.4 Utilize a simple model of multiple deposit creation, showing how the
central bank can control the level of deposits by setting the level of reserves
If a bank has excess reserves of $20,000 and demand deposit liabilities of $80,000, and if the
reserve requirement is 20 percent, then the bank has total reserves of ____.
A) $16,000
B) $20,000
C) $26,000
D) $36,000
Answer: D
Diff: 2 Type: MC Page Ref: 387 - 388
Skill: Applied
Objective List: 16.4 Utilize a simple model of multiple deposit creation, showing how the
central bank can control the level of deposits by setting the level of reserves
If a bank has excess reserves of $5,000 and demand deposit liabilities of $80,000, and if the
reserve requirement is 20 percent, then the bank has actual reserves of ____.
A) $11,000
B) $20,000
C) $21,000
D) $26,000
Answer: C
Diff: 2 Type: MC Page Ref: 387 - 388
Skill: Applied
Objective List: 16.4 Utilize a simple model of multiple deposit creation, showing how the
central bank can control the level of deposits by setting the level of reserves