If the reserve ratio is 0.3 and a deposit of $1,000 is made to the bank, the bank can lend out $700.

Name: If the reserve ratio is 0.3 and a deposit of $1,000 is made to the bank, the bank can lend out $700.
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Quizplus · Accepted Answer

With a reserve ratio of 0.3 (or 30%), the bank must keep 30% of deposits as reserves and can lend out the remaining 70%. Therefore, from a $1,000 deposit, the bank can lend out $1,000 - (0.3 * $1,000) = $700.

If the Reserve Ratio Is 0