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Suppose a Bank Has Excess Reserves of $50 and the Reserve

Question 116
Multiple Choice

Suppose a bank has excess reserves of $50 and the reserve ratio is 20%. If Andy deposits $5,000 of cash in his checking account and the bank lends $2,500 to Molly, the money supply: A) is increased by $7,500. B) is increased by $2,500. C) remains unchanged. D) is decreased by $5,000.

Related questions
Q 117
Suppose your grandma sends you $100 for your birthday and you deposit it in your checking account. The reserve ratio is 10%. Based upon this deposit, the bank's reserves have increased by _____ and the bank's checkable deposits have increased by _____. A) $100; $100 B) $100; $90 C) $90; $100 D) $10; $100
Q 118
If banks were required to keep 100% of deposits in reserves, they could: A) make more loans. B) make no loans. C) make more deposits. D) use excess reserves for loans.
Q 119
If a bank has deposits of $100,000, cash in its vault of $10,000, and $15,000 on deposit at the Federal Reserve and if the required reserve ratio is 20%, then the bank has: A) no excess reserves. B) excess reserves of $5,000. C) insufficient reserves to meet requirements. D) an insufficient deposit to loan ratio.
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