Suppose a bank has $1,000 in deposits and $100 in reserves.If the desired reserve ratio is 5 percent,how much can this bank increase its loans?
A)$0
B)$400
C)$80
D)$50
E)$100

Name: Suppose a bank has $1,000 in deposits and $100 in reserves.If the desired reserve ratio is 5 percent,how much can this bank increase its loans? A)$0 B)$400 C)$80 D)$50 E)$100
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Question

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The bank needs to keep 5% of $1,000 in reserves, which is $50. Since it has $100 in reserves, it can loan out the excess $50.

Suppose a Bank Has $1,000 in Deposits and $100 in Reserves.If