Initially a Bank Has a Minimum Reserve Requirement of 10

question 40

Multiple Choice

Initially a bank has a minimum reserve requirement of 10 percent and no excess reserves.If $10,000 is deposited in the bank,then ceteris paribus:

• A) The bank can increase its loans by $10,000.
• B) The bank can increase its loans by $9,000.
• C) Total reserves will increase by $9,000.
• D) Required reserves will increase by $10,000.