Suppose the required reserves ratio is 10 percent. First National Bank (FNB), a commercial bank located at the USA, experiences a $100 increase in its deposits. In response, the bank increases its vault cash by $15 and increases its reserve balances by $5. Which of the following statements istrue? A. FNB has $15 of required reserves after this transaction. B. FNB has $5 of required reserves after this transaction. C. FNB has $10 excess reserves after this transaction. D. FNB has $5 of excess reserves after this transaction.
Suppose the required reserves ratio is 10 percent. First National Bank (FNB), a commercial bank located at the USA, experiences a $100 increase in its deposits. In response, the bank increases its vault cash by $15 and increases its reserve balances by $5. Which of the following statements istrue? A. FNB has $15 of required reserves after this transaction. B. FNB has $5 of required reserves after this transaction. C. FNB has $10 excess reserves after this transaction. D. FNB has $5 of excess reserves after this transaction.
Chapter25: Money Creation
Section: Chapter Questions
Problem 8SQP
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Question
Suppose the
A.
FNB has $15 of required reserves after this transaction.
B.
FNB has $5 of required reserves after this transaction.
C.
FNB has $10
D.
FNB has $5 of excess reserves after this transaction.
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