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Scenario: Money Creation
The reserve requirement is 20%. Leroy receives $1,000 as a graduation present and deposits the money in his checking account. The bank does NOT want to hold excess reserves.
-(Scenario: Money Creation) Look at the scenario Money Creation. How much of the $1,000 deposit is the bank required to keep in reserves?

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Quizplus · Accepted Answer

The reserve requirement is 20%, so the bank is required to keep $200 in reserves (20% of $1,000). That means the bank can loan out the remaining $800.

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