Assume that the Federal Reserve sets a required reserve ratio of 10%. If a bank receives a deposit of $1000, then
A) it must keep $10 on reserve and can loan out $990.
B) it must keep $100 on reserve and can loan out $900.
C) it must keep $1000 on reserve and cannot make any loans.
D) it must keep $900 on reserve and can loan out $100.
Correct Answer:
Verified
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