If a bank has no excess reserves,the reserve requirement is 10%,and it receives a new $2 million deposit,the bank can lend out

Question

Quizplus · Accepted Answer

If the bank has no excess reserves, it means that it is meeting the reserve requirement, which is 10% in this case. A new deposit of $2 million would increase its reserves by $2 million x 10% = $200,000. This leaves the bank with $1,800,000 ($2 million - $200,000) that it can lend out. Therefore, the correct answer is D.

If a Bank Has No Excess Reserves,the Reserve Requirement Is