Imagine that Kristy deposits $10,000 of Federal Reserve Refer to Scenario 14-2. As a result of Kristy's deposit, Bank A can make a maximum loan of (hint: remember Bank A has to back a fraction of Kristy's new checking account balance)

Imagine that Kristy deposits $10,000 of Federal Reserve Refer to Scenario 14-2. As a result of Kristy's deposit, Bank A can make a maximum loan of (hint: remember Bank A has to back a fraction of Kristy's new checking account balance)

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter13: Money And The Banking System

Section: Chapter Questions

Problem 18CQ

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Question

Scenario 14-2
Imagine that Kristy deposits $10,000 of Federal Reserve notes for deposit at Bank A and that the required reserve ratio is 20%.
Refer to Scenario 14-2. As a result of Kristy's deposit, Bank A can make a maximum loan of (hint: remember Bank A has to back a
fraction of Kristy's new checking account balance)
O $50,000,
O $10,000
O $2,000.
$8,000.

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