If the Reserve Ratio Is 10 Percent and a Bank

question 114

Multiple Choice

If the reserve ratio is 10 percent and a bank receives a new deposit of $800,which of the following will this bank most likely do?

• A) It will increase its required reserves by $8000.
• B) It will make new loans of $8000.
• C) It will be able to make new loans of $800.
• D) It will initially see its total reserves increase by $800.

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