If the Required Reserve Ratio Is 10 Percent and a Bank

question 141

Multiple Choice

If the required reserve ratio is 10 percent and a bank receives a new deposit for $100,000,then the:

• A)bank must keep $5,000 in excess reserves.
• B)bank's required reserves increase by $45,000.
• C)bank's liabilities increase by $100,000.
• D)bank can increase its loans by up to $50,000.
• E)bank can increase its loans by up to $400,000.

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