Assume the Reserve Requirement Is 10% and All Banks Are

question 242

Multiple Choice

Assume the reserve requirement is 10% and all banks are fully loaned up. If a new deposit of $10,000 is made into Bank X, that bank, with this deposit, can make new loans of:

• A) $9,000.
• B) $10,000.
• C) $1,000.
• D) $11,000.

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Definitions:

Security Interest

A security interest is a legal right granted by a debtor to a creditor over the debtor's property as collateral for a loan.

Individual Retirement Account

A financial account that provides tax advantages for retirement savings in the United States.

Bankruptcy Exemptions

Specific assets or types of property that the bankruptcy law allows an debtor to keep from creditors when filing for bankruptcy.

Claims Of Creditors

The legal rights of creditors to collect what is owed to them by a debtor.