If the Fed buys a $100,000 government security from a bank when the desired reserve ratio is 10 percent and the currency drain ratio is 50 percent, the bank can loan a maximum of
A)$100,000.
B)$60,000.
C)$40,000.
D)$90,000.
E)$50,000.

Question

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The Answer of If the Fed buys a $100,000 government security from a bank when the desired reserve ratio is 10 percent and the currency drain ratio is 50 percent, the bank can loan a maximum of
A)$100,000.
B)$60,000.
C)$40,000.
D)$90,000.
E)$50,000.

If the Fed Buys a $100,000 Government Security from a Bank