A Bank Has $100,000 in Checkable Deposits and $30,000 in Reserves

question 100

Multiple Choice

A bank has $100,000 in checkable deposits and $30,000 in reserves. If the required reserve ratio is 20%, what is the maximum amount of loans this bank can create?

• A) $0
• B) $10,000
• C) $20,000
• D) $30,000

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Definitions:

Bronchi

The main air passages into the lungs, branching from the trachea and allowing air to flow in and out of the lungs.

Larynx

Often referred to as the voice box, an organ in the top of the neck involved in breathing, sound production, and protecting the trachea against food aspiration.

Cartilage

A flexible, semi-rigid connective tissue found in various parts of the body, including the joints, ears, and nose, which provides support and cushioning.

Thoracic Cavity

The part of the body located between the neck and the abdomen, enclosed by the ribs and containing the heart and lungs.