If a Bank Has $1 Million in Demand Deposits,$400 000

question 11

Multiple Choice

If a bank has $1 million in demand deposits,$400 000 in reserves,and desires a 30 percent reserve ratio,how much money could a bank directly create by loaning out its excess reserves?

• A)$100 000
• B)$300 000
• C)$400 000
• D)$600 000

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