QuestionJuly 28, 2025

If a bank has a required reserve ratio of 10 percent and there is 1,000 in deposits, what is the maximum possible amount that this bank could lend out? 9,000 900 10,000 100

If a bank has a required reserve ratio of 10 percent and there is 1,000 in deposits, what is the maximum possible amount that this bank could lend out? 9,000 900 10,000 100
If a bank has a required reserve ratio of 10 percent and there is 1,000
in deposits, what is the maximum possible amount that this bank could
lend out?
 9,000
 900
 10,000
 100

Solution
4.4(273 votes)

Answer

\900 Explanation 1. Calculate Required Reserves The required reserve is 10% of \1,000. **Required Reserves = 0.10 \times \1,000 = \100**. 2. Calculate Maximum Loanable Amount Subtract the required reserves from total deposits to find the maximum loanable amount. **Maximum Loanable Amount = \1,000 - \100 = \900**.

Explanation

1. Calculate Required Reserves<br /> The required reserve is 10% of $\$1,000$. **Required Reserves = 0.10 \times \$1,000 = \$100**.<br /><br />2. Calculate Maximum Loanable Amount<br /> Subtract the required reserves from total deposits to find the maximum loanable amount. **Maximum Loanable Amount = \$1,000 - \$100 = \$900**.
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