A single commercial bank must meet a 25 percent reserve requirement. If the bank has no excess reserves initially and $5,000 of 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.
Correct Answer:
Verified
Q44: When commercial banks use excess reserves to
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A) Required
A) allow loans
