Answered: Required reserves may be held either in…

Required reserves may be held either in the bank's vault or: OA. On deposit with the Fed. B. Invested in real estate. O C. Invested in the stock market. D. Under a mattress. E. In the form of loans.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Required reserves may be held either in the bank's vault or:
A. On deposit with the Fed.
B. Invested in real estate.
O C. Invested in the stock market.
D. Under a mattress.
O E. In the form of loans.

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The government of a small country imposes a minimum reserve ratio of 7%. If a bank within this country receives a deposit of $130,000, then: Select one: a. $9,100 should be lent out to customers and $120,900 should be held by the bank b. $120,900 should be lent out to customers and $9,100 should be held by the bank c. None of the answers are correct d. $130,000 should be fully lent to customers at 7% $130,000 should be fully lent to customers at 7% $130,000 should be fully lent to customers at 7% e. $130,000 should be held by the bank
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Match the term with the definition: What the bank is holding - or it's reserve deposit A. Primary Reserve Occurs if the bank holds more than the required minimum on reserve B. Secondary Reserve The minimum amount of vault cash and deposits at the Federal Reserve district bank that must be held C. Required Reserve A bank's vault cash and it's deposits at the Federal Reserve D. Actual Reserves Treasury bills, notes, certificates, and bonds that will mature in less than a year Excess Reserves
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1