Assume That a Bank Initially Has No Excess Reserves

question 146

Multiple Choice

Assume that a bank initially has no excess reserves. If it receives $5,000 in cash from a depositor and the bank finds that it can safely lend out $4,500, the reserve requirement must be

• A) zero.
• B) 10 percent.
• C) 20 percent.
• D) 25 percent.

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