If a Single Banks Faces a Required Reserve Ratio of 20

question 73

Multiple Choice

If a single banks faces a required reserve ratio of 20 percent, has total reserves of $500,000, and checkable deposit liabilities of $400,000, what is the maximum amount of money this bank could create (add to the money supply) ?

• A) $420,000.
• B) $100,000.
• C) $80,000.
• D) $2,100,000.

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