Assume the reserve requirement is 10 percent. First National Bank has vault cash and deposits with the Fed of $40 million, loans and securities of $360 million, and demand deposits of $400 million. First National:
A) is not in a position to extend additional loans.
B) could extend a maximum of $10 million of additional loans.
C) could extend a maximum of $20 million of additional loans.
D) could extend a maximum of $40 million of additional loans.
Correct Answer:
Verified
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