If the reserve requirement is 15 percent a bank desires to hold no excess reserves and it receives a new deposit of $10, then this bank
A)must increase its required reserves by $10.
B)will initially see its total reserves increase by $15.
C)will be able to make new loans up to a maximum of $8.50.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

The bank must hold 15% of the $10 deposit as required reserves, which is $1.50, allowing it to loan out the remaining $8.50.

If the Reserve Requirement Is 15 Percent a Bank Desires