Suppose that the reserve requirement is 10 percent and a commercial bank has $500 million in deposits. In this case, the required reserves are _____ million, and the maximum amount the banks can lend out is _____ million.

Question

Quizplus · Accepted Answer

The required reserves are 10 percent of $500 million, which is $50 million. The maximum amount the bank can lend out is the total deposits minus the required reserves, which is $500 million - $50 million = $450 million.

Suppose That the Reserve Requirement Is 10 Percent and a Commercial