The amount that a commercial bank can lend is determined by its
A) required reserves.
B) excess reserves.
C) outstanding loans.
D) outstanding checkable deposits.

Question

Quizplus · Accepted Answer

The amount a commercial bank can lend is primarily determined by its excess reserves, which are the reserves it holds above the minimum required by the central bank. These excess reserves can be used to extend new loans.

The Amount That a Commercial Bank Can Lend Is Determined