Initially a Bank Has a Required Reserve Ratio of 10

question 21

Multiple Choice

Initially a bank has a required reserve ratio of 10 percent and no excess reserves.If $1,000 is deposited into the bank,then,ceteris paribus,

• A)This bank can increase its loans by $900.
• B)This bank can increase its loans by $1,000.
• C)Total reserves will increase by $900.
• D)Required reserves will increase by $1,000.