If Your Bank Faces a 20 Percent Required Reserve Ratio

question 46

Multiple Choice

If your bank faces a 20 percent required reserve ratio and receives a cash deposit of $4,000 into a checkable deposit account, the maximum total amount of money possible after the banking system makes all loans is:

• A) $3,200.
• B) $4,000.
• C) $16,000.
• D) $20,000.