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

question 209

Multiple Choice

If a bank has $1 million in demand deposits, $400,000 in reserves, and faces a 30 percent reserve requirement, the amount of money that a bank could initially create by loaning out their excess reserves is:

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