If a bank receives a new transaction deposit of $10,000 and the reserve ratio is 15 percent, then the bank could expand its loans by as much as

Question

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The reserve ratio is the portion of deposits the bank must hold in reserve and cannot loan out. If the reserve ratio is 15%, then the bank must hold 15% of the $10,000 deposit, which is $1,500. The remaining $8,500 can be loaned out, so the bank could expand its loans by up to $8,500.

If a Bank Receives a New Transaction Deposit of $10,000