Suppose That the Banking System Currently Has No Excess Reserves

question 76

Multiple Choice

Suppose that the banking system currently has no excess reserves and that a bank receives a deposit into a checking account of $10,000 in currency.If the required reserve ratio is 0.20,what is the maximum amount that the banking system can lend out?

• A) $8,000
• B) $10,000
• C) $40,000
• D) $50,000

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