Suppose a bank has checkable deposits of $100,000 and the required reserve ratio is 20 percent. If the bank currently has $100,000 in reserves, it could lend out as much as:
A) $100,000.
B) $400,000.
C) $80,000.
D) $20,000.

Question

Quizplus · Accepted Answer

The bank is required to keep 20% of $100,000 in reserves, which is $20,000. Since the bank has $100,000 in reserves, it can lend out the excess reserves, which is $100,000 - $20,000 = $80,000.

Suppose a Bank Has Checkable Deposits of $100,000 and the Required