A bank has no unplanned reserves. Then it receives a new deposit for $100,000. If it has a desired reserve ratio of 20 percent, by how much can it increase its loans?
A) $20,000
B) $80,000
C) $120,000
D) $180,000

Question

Quizplus · Accepted Answer

With a desired reserve ratio of 20 percent, the bank must keep $20,000 (20% of $100,000) as reserves and can loan out the remaining $80,000.

A Bank Has No Unplanned Reserves