Best National Bank is subject to a 20 percent required reserve ratio. If this bank received a new checkable deposit of $1,000, it could make new loans of:

Question

Quizplus · Accepted Answer

The required reserve ratio is 20%, which means that out of the $1,000 deposit, the bank must keep a required reserve of $200 (20% of $1,000). The bank can then lend out the remaining $800 ($1,000 - $200) as new loans. Therefore, the best choice is B.

Best National Bank Is Subject to a 20 Percent Required