Suppose you deposit $1,000 in your checking account. If the reserve ratio is 10%, how much of your deposit can the bank loan out?
A) $0.
B) $100.
C) $900.
D) $1,000.

Question

Quizplus · Accepted Answer

The reserve ratio is the percentage of a bank's deposits that it must hold as reserves. In this case, the reserve ratio is 10%, so the bank must hold 10% of the $1,000 deposit, which is $100. Therefore, the bank can loan out the remaining $900 (which is the answer choice C).

Suppose You Deposit $1,000 in Your Checking Account