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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 can the bank lend out?

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The bank can lend out 80% of the $1,000 deposit, which is $800. The remaining 20%, or $200, must be kept as reserves.

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