Assume a Simplified Banking System in Which All Banks Are

question 84

Multiple Choice

Assume a simplified banking system in which all banks are subject to a uniform reserve requirement of 20 percent and checkable deposits are the only from of money. A bank that received a new checkable deposit of $10,000 would be able to extend new loans up to a maximum of:

• A) $2,000.
• B) $8,000.
• C) $9,000.
• D) $10,000.

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