A Chartered Bank Has Demand-Deposit Liabilities of $500,000, Cash Reserves

question 31

Multiple Choice

A chartered bank has demand-deposit liabilities of $500,000, cash reserves of $150,000, and a desired reserve ratio of 20 percent.The amount by which this single chartered bank and the amount by which the banking system can increase loans are respectively:

• A)$30,000 and $150,000.
• B)$50,000 and $250,000.
• C)$50,000 and $500,000.
• D)$100,000 and $500,000.