Regional Bank is subject to a 10 percent required-reserve ratio. If this bank received a new checkable deposit of $1,000, it could make new loans of

Name: Regional Bank is subject to a 10 percent required-reserve ratio. If this bank received a new checkable deposit of $1,000, it could make new loans of
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Since the required-reserve ratio for the bank is 10 percent, the bank must keep $100 (10% of $1,000) as reserves and can lend out the remaining $900. Therefore, the bank can make new loans of $900.

Regional Bank Is Subject to a 10 Percent Required-Reserve Ratio