1) A bank has no excess reserves and demand deposit liabilities of $100,000 when the required 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.
2) 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.
3) A bank has excess reserves of $1,000 and demand deposit liabilities of $80,000 when the reserve requirement is 25 percent. If the reserve requirement is lowered to 20 percent, the bank”s excess reserves will be
A) $1,000.
B) $5,000.
C) $8,000.
D) $9,000.
4) Decisions by depositors to increase their holdings of ________, or of banks to hold ________ will result in a smaller expansion of deposits than the simple model predicts.
A) deposits; required reserves
B) deposits; excess reserves
C) currency; required reserves
D) currency; excess reserves