Assuming a 20 percent legal reserve requirement,a new deposit of $10,000 in a commercial bank will place that bank in a position to lend out an additional

Question

Quizplus · Accepted Answer

A 20 percent legal reserve requirement means that the bank must keep 20 percent of the deposited funds as a reserve and can lend out the remaining 80 percent. Therefore, the bank can lend out 80 percent of $10,000, which is $8,000. So, the correct answer is B.

Assuming a 20 Percent Legal Reserve Requirement,a New Deposit of $10,000