If you deposit a $50 bill in a chartered bank that has a 10 percent desired reserve ratio, the bank will:
A)have $45 of additional excess reserves.
B)be capable of lending an additional $500.
C)be capable of lending an additional $50.
D)have $50 of desired reserves.

Question

Quizplus · Accepted Answer

The bank must keep 10% of the $50 deposit as reserves, which is $5. The remaining $45 is excess reserves that the bank can lend out.

If You Deposit a $50 Bill in a Chartered Bank