Suppose All Banks Are Subject to a Uniform Reserve Requirement

question 62

Multiple Choice

Suppose all banks are subject to a uniform reserve requirement of 20 percent and that the First Guarantee Bank has no excess reserves.If a new customer deposits $50,000,the bank could extend new loans up to a maximum of:

• A)$10,000.
• B)$40,000.
• C)$50,000.
• D)$250,000.