A bank has a 10 percent reserve requirement, $4,000 in deposits, and has loaned out all it can given the reserve requirement.
A)It has $40 in reserves and $3,960 in loans.
B)It has $400 in reserves and $3,600 in loans.
C)It has $444 in reserves and $3,556 in loans.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

With a 10% reserve requirement on $4,000 in deposits, the bank must hold $400 in reserves and can loan out the remaining $3,600.

A Bank Has a 10 Percent Reserve Requirement, $4,000 in Deposits