If at the End of the Business Day a Bank

question 177

Multiple Choice

If at the end of the business day a bank has $50,000 in excess reserves,and the required reserve ratio is 20 percent,the bank can maximize its profits if it

• A)keeps the excess reserves
• B)loans out $40,000
• C)loans $50,000 to another bank
• D)borrows $50,000 to remove the excess reserves
• E)keeps $10,000 and deposits $40,000 with the Fed

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