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Suppose the required reserve ratio is .15 and individuals hold no cash. Total bank deposits are $100 million and the banks hold $20 million in reserves. How much more money can the bank create if it does not hold excess reserves? A. $33 million B. $66 million C. $100 million D. $667 million

Suppose the required reserve ratio is .15 and individuals hold no cash. Total bank deposits are $100 million and the banks hold $20 million in reserves. How much more money can the bank create if it does not hold excess reserves? A. $33 million B. $66 million C. $100 million D. $667 million

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Suppose the required reserve ratio is .15 and individuals hold no cash. Total bank deposits are $100 million and the banks hold $20 million in reserves. How much more money can the bank create if it does not hold excess reserves? A. $33 million B. $66 million C. $100 million D. $667 million
Transcribed Image Text:Suppose the required reserve ratio is .15 and individuals hold no cash. Total bank deposits are $100 million and the banks hold $20 million in reserves. How much more money can the bank create if it does not hold excess reserves? A. $33 million B. $66 million C. $100 million D. $667 million
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