Use the Following to Answer Questions

question 152

Multiple Choice

Use the following to answer questions :
Scenario: Money Creation
The reserve requirement is 20%. Leroy receives $1,000 as a graduation present and deposits the money in his checking account. The bank does NOT want to hold excess reserves.
-(Scenario: Money Creation) Look at the scenario Money Creation. How much of the $1,000 deposit is the bank required to keep in reserves?

• A)$1,000
• B)$100
• C)$200
• D)$800