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A Bank Has No Excess Reserves

Question 289

Multiple Choice
A bank has no excess reserves. Then it receives a new deposit for $100,000. If it has a desired reserve ratio of 20 percent, by how much can it increase its loans?

A bank has no excess reserves. Then it receives a new deposit for $100,000. If it has a desired reserve ratio of 20 percent, by how much can it increase its loans?


A) $20,000
B) $80,000
C) $120,000
D) $180,000

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