Assume That a Bank Has $2 Million in Reserves and Checkable

question 178

Multiple Choice

Assume that a bank has $2 million in reserves and checkable deposits of $10 million and the required reserve ratio on checkable deposits is 20%.The maximum amount of new loans this bank can make is

• A)$500,000.
• B)$1 million.
• C)$200,000.
• D)zero.
• E)$700,000.

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