Suppose Bank a Holds $200 of Reserves, Has Deposits of $1000

question 36

Multiple Choice

Suppose Bank A holds $200 of reserves, has deposits of $1000, and the desired reserve ratio is 15 per cent. How many loans can Bank A create at Bank A?

• A)Zero, because Bank A has no excess reserves
• B)$50
• C)$200
• D)$850

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