# Chapter 16 Money and the Banking System

15)

Given the following information about Metropolis Bank:

Bank Deposits $50,000

Loans 17,500

Required Reserves 30,000

Excess Reserves 2,500

The

required reserve ratio must be

A)

75%.

B)

60%.

C)

30%.

D)

15%.

16)

Suppose a bank has $200,000 in deposits and a reserve ratio of 15%. Its

required reserves are

A)

$350.

B)

$1,500.

C)

$3,000.

D)

$30,000.

17)

Suppose a bank has $8 million in deposits and a reserve ratio of 20%. Its

required reserves are

A)

$40,000.

B)

$400,000.

C)

$1,600,000.

D)

$16,000,000.

18)

Suppose a bank has $200,000 in deposits, a reserve ratio of 10%, and reserves

of $45,000. This bank has excess reserves of

A)

$155,000.

B)

$25,000.

C)

$10,000.

D)

$5,000.

19)

Suppose a bank has $1 million in deposits, a reserve ratio of 25%, and reserves

of $250,000. This bank has excess reserves of

A)

$250,000.

B)

$125,000.

C)

$62,500.

D)

$0.

20)

Suppose a bank has $600,000 in deposits, a reserve ratio of 20%, and bank

reserves of $240,000. This bank can make new loans in the amount of

A)

$840,000.

B)

$360,000.

C)

$120,000.

D)

$12,000.

21)

Suppose a bank has $300,000 in deposits, a reserve ratio of 5%, and bank

reserves of $45,000. This bank can make new loans in the amount of

A)

$345,000.

B)

$45,000.

C)

$30,000.

D)

$15,000.

22)

Suppose Diego deposits $4,000 in his bank. If the reserve ratio is 10%, this

will lead to a maximum increase of ________ in checking account balances

throughout all banks.

A)

$0

B)

$4,000

C)

$10,000

D)

$40,000

23)

Suppose Ariana deposits $75,000 in her bank. If the reserve ratio is 20%, this

will lead to a maximum increase of ________ in checking account balances throughout

all banks.

A)

$15,000

B)

$375,000

C)

$750,000

D)

$1,500,000

24)

Suppose Darrell has $4,000 in currency which he deposits in his bank. If the

reserve ratio is 25%, this will lead to a maximum increase of ________ in M1

throughout all banks.

A)

$0

B)

$4,000

C)

$6,000

D)

$12,000

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