Assume a bank has to keep a 25% Reserve Ratio. If $100 is deposited at the bank, how much can the bank lend out of that deposit? If the loan is deposited at another bank with a 25% Reserve Ratio, how much will be able to be lent then? If every loan was deposited, how much money would be created (added) to the money supply?

Answer rating: 100% (QA)

The reserve ratio is the percentage of customer deposits that banks are required to hold as reserves ... View the full answer