Answer the Question on the Basis of the Following Table

question 4

Multiple Choice

Answer the question on the basis of the following table for a commercial bank or thrift: $\begin{array}{c}\begin{array}{c}(1) \\\text {Legal Reserve}\\\underline{\text {Ratio (\%) }}\\10 \\20 \\25 \\30\end{array}\begin{array}{c}(2) \\\text {Checkable}\\\underline{\text {Deposits}}\\ \$ 40,000 \\40,000\\40,000\\40,000\end{array}\begin{array}{c}(3) \\\text {Actual}\\\underline{\text {Reserves}}\\\$ 10,000 \\10,000\\10,000\\10,000\end{array}\end{array}$

Refer to the table.When the legal reserve ratio is 20 percent,the money-creating potential of the entire banking system is:

• A) $4,000.
• B) $6,000.
• C) $8,000.
• D) $10,000.