Suppose Bank ABC has a target reserve ratio of 10%,no excess reserves,and it receives a new deposit of $500 000.This bank will initially expand its loans by

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The bank's target reserve ratio is 10%, which means they need to hold 10% of their deposits as reserves. With the new deposit of $500,000, they will need to hold $50,000 in reserve (10% of $500,000). Since they have no excess reserves, they will need to increase their reserves by reducing their loans. Therefore, they can expand their loans by $450,000 ($500,000 deposit - $50,000 reserve requirement), which is option B.

Suppose Bank ABC Has a Target Reserve Ratio of 10%,no