Suppose that you deposit $2,000 in your bank and the required reserve ratio is 10 percent.The maximum loan your bank can made as a direct result of your deposit is

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The required reserve ratio of 10% means that the bank is required to hold 10% of your deposit as reserves and can lend out the remaining 90%. Therefore, the maximum loan that can be made is 90% of $2,000, which is $1,800. Choice A is not correct because $200 is only 10% of the deposit, which is the amount that must be held in reserve. Choice C is not correct because the bank cannot lend out the entire deposit since a portion must be held in reserve. Choice D is not correct because it is far above the maximum loan amount that can be made with a $2,000 deposit and a 10% reserve requirement.

Suppose That You Deposit $2,000 in Your Bank and the Required