If Bank of Mateer has a required reserve ratio of 40% and there is $100,000 in deposits, is the maximum amount of money it can loan.

Question

Quizplus · Accepted Answer

To find the maximum amount of money that Bank of Mateer can loan out, we need to use the formula:
Maximum Loan Amount = (1 - Required Reserve Ratio) x Total Deposits
= (1 - 0.4) x $100,000
= 0.6 x $100,000
= $60,000
Therefore, the best choice is D) $60,000, which is the maximum amount of money the bank can loan out given their required reserve ratio and total deposits.

If Bank of Mateer Has a Required Reserve Ratio of 40