A bank has an 8 percent reserve requirement,$10,000 in deposits,and has loaned out all it can given the reserve requirement.
A)It has $80 in reserves and $9,920 in loans.
B)It has $800 in reserves and $9,200 in loans.
C)It has $1,250 in reserves and $8,750 in loans.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

The reserve requirement is 8% of $10,000, which is $800. Therefore, the bank must hold $800 in reserves and can loan out the remaining $9,200.

A Bank Has an 8 Percent Reserve Requirement,$10,000 in Deposits,and