(Table) SCENARIO: Assume that the Empathy State Bank begins with the balance sheet below and is fully loaned up. Vanessa has a checking account at Empathy State Bank. If she writes a check for $5,000 to pay for her new car and if the bank has a reserve requirement of 5%, this bank's excess reserves will be:
A) $250.
B) $5,250.
C) $0; Empathy State Bank will be fully loaned up.
D) negative; Empathy State Bank will need to acquire $2,250 in reserves.

Question

(Table) SCENARIO: Assume that the Empathy State Bank begins with the balance sheet below and is fully loaned up. Vanessa has a checking account at Empathy State Bank. If she writes a check for $5,000 to pay for her new car and if the bank has a reserve requirement of 5%, this bank's excess reserves will be: 
A) $250. 
B) $5,250. 
C) $0; Empathy State Bank will be fully loaned up. 
D) negative; Empathy State Bank will need to acquire $2,250 in reserves.

Quizplus · Accepted Answer

The Answer of (Table) SCENARIO: Assume that the Empathy State Bank begins with the balance sheet below and is fully loaned up. Vanessa has a checking account at Empathy State Bank. If she writes a check for $5,000 to pay for her new car and if the bank has a reserve requirement of 5%, this bank's excess reserves will be: 
A) $250. 
B) $5,250. 
C) $0; Empathy State Bank will be fully loaned up. 
D) negative; Empathy State Bank will need to acquire $2,250 in reserves.

(Table) SCENARIO: Assume That the Empathy State Bank Begins with the Balance