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A bank has excess reserves of $10,000 and demand deposit liabilities of $100,000 when the
desired reserve ratio is 20 percent. If the reserve ratio is raised to 25 percent, the bank's excess
reserves will be ____.
A) -$5,000
B) -$1,000
C) $1,000
D) $5,000
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
A bank has no excess reserves and demand deposit liabilities of $100,000 when the desired
reserve ratio is 20 percent. If the reserve ratio is raised to 25 percent, the bank's excess reserves
will now be ____.
A) -$5,000
B) -$1,000
C) $1,000
D) $5, 000
Answer: A
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
A bank has excess reserves of $1,000 and demand deposit liabilities of $80,000 when the
reserve requirement is 20 percent. If the reserve requirement is lowered to 10 percent, the bank's
excess reserves will be ____.
A) $1,000
B) $8,000
C) $9,000
D) $17,000
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