If Jose deposits $2,000 in his bank and the desired reserve ratio is 10 percent,what is the amount of new loans that the bank can make?
A)$2,000
B)$200
C)$1,800
D)$1,900
E)$2,200

Question

Quizplus · Accepted Answer

The desired reserve ratio is the minimum amount of reserves that the bank is required to hold. Since the desired reserve ratio is 10 percent, the bank must hold 10 percent of Jose's deposit, which is $200. Therefore, the bank can lend out the remaining $1,800.

If Jose Deposits $2,000 in His Bank and the Desired