Suppose a Bank Has $100 Million in Checking Account Deposits

question 81

Multiple Choice

Suppose a bank has $100 million in checking account deposits with no excess reserves and the required reserve ratio is 10 percent.If the Federal Reserve reduces the required reserve ratio to 4 percent,then the bank can make a maximum loan of

• A)$0.
• B)$4 million.
• C)$6 million.
• D)$10 million.