Following a new deposit of $500,the loans of a commercial bank increase by $400.In this situation,the desired reserve ratio is most likely

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The desired reserve ratio is the percentage of deposits that a bank must hold in reserves. In this case, the bank's loans increased by $400 after receiving a new deposit of $500, which means that the bank was able to lend out $100 of the new deposit (since it must hold 20% of the deposit as required reserves). This implies that the desired reserve ratio is 20%, which means that Option B is the best choice. Option A (0%) is not possible as all banks are required to hold some minimum level of reserves. Options C (80%) and D (180%) are also not possible as they would require the bank to hold more in reserves than the deposit itself, which is not allowed.

Following a New Deposit of $500,the Loans of a Commercial