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A loan made by a bank is considered ________ of that bank.


A) a liability
B) capital
C) net worth
D) an asset

E) A) and B)
F) All of the above

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Excess reserves in a bank are the difference between required reserves and the bank's total net worth.

A) True
B) False

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Teddy transfers $175 from his money market fund to his checking account.This transaction will


A) decrease M2 and increase M1.
B) increase M1,but leave M2 unchanged.
C) decrease M1 and increase M2.
D) decrease both M1 and M2.

E) A) and B)
F) A) and C)

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The Intracoastal Bank has $5 million in deposits and $500,000 in reserves.If the required reserve ratio is 5%,excess reserves are equal to


A) zero.
B) $125,000.
C) $250,000.
D) $500,000.

E) All of the above
F) B) and C)

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