Asked by Jocelyn 30545 Leon on Jun 15, 2024
Verified
If a bank has no excess reserves,the reserve requirement is 25%,and receives a $100,000 deposit,the bank can lend out
A) $100,000.
B) $75,000.
C) $50,000.
D) $0.
Excess Reserves
Banks' reserves that are greater than the minimum regulatory requirement, not needed to fulfill lending demands.
Reserve Requirement
The reserve requirement is a central bank regulation that sets the minimum amount of reserves that must be held by a commercial bank.
Lend Out
The act of providing money or resources to another party with the expectation that the money or resources will be returned, often with interest.
- Comprehend how reserve requirements impact banks' ability to lend.
Verified Answer
RL
Rayvhen LaedaJun 17, 2024
Final Answer :
B
Explanation :
If the reserve requirement is 25%, then the bank must keep 25% of the deposit as reserves and can lend out the remaining 75%. Therefore, the bank can lend out $75,000 ($100,000 x 0.75) and must keep $25,000 as reserves.
Learning Objectives
- Comprehend how reserve requirements impact banks' ability to lend.