The banking system has deposits of $100 million and no excess liquidity. Suppose all the banks decide to reduce their liquidity ratio from 25% to 20%. If there are no leakages from the banking system, the banking system:
A) could make additional loans up to $25 million
B) could make additional loans up to $20 million
C) could not make any additional loans because it has not received any new deposits
D) could make additional loans up to $5 million
Correct Answer:
Verified
Q4: Suppose all financial intermediaries in the financial
Q5: The central bank of Australia is known
Q6: Money demand is a function of all
Q7: Suppose all financial intermediaries in the financial
Q8: Mike makes excellent cheesecake and Sue is
Q10: In calculating its capital adequacy ratio, a
Q11: Lucy works at the World Bank. She
Q12: Oz Bank has $500 million in deposits.
Q13: To be suitable as a medium of
Q14: Assume that banks become more conservative in
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents