A bank has excess reserves of $4,000 and demand deposits of $40,000; the reserve requirement is 20%. If the reserve requirement is increased to 25%, the maximum amount of new loans this bank can make is
A) $1,500.
B) $2,000.
C) $2,500.
D) $3,000.

Question

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The Answer of A bank has excess reserves of $4,000 and demand deposits of $40,000; the reserve requirement is 20%. If the reserve requirement is increased to 25%, the maximum amount of new loans this bank can make is
A) $1,500.
B) $2,000.
C) $2,500.
D) $3,000.

A Bank Has Excess Reserves of $4,000 and Demand Deposits