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

Question

Quizplus · Accepted Answer

If the reserve ratio is 10%, it means that the bank is required to keep 10% of your deposit as reserves and can loan out the rest. Therefore, the bank can loan out 90% of your deposit, which is $900.

Suppose You Deposit $1,000 in Your Checking Account