A Single Chartered Bank Has a Desired Reserve Ratio of 25

question 80

Multiple Choice

A single chartered bank has a desired reserve ratio of 25 percent.If the bank has no excess reserves initially and $5,000 cash is deposited in the bank, it can increase its loans by a maximum of:

• A)$1,250
• B)$120,000
• C)$5,000
• D)$3,750

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Definitions:

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