Question

Initially a bank has a required reserve ratio of 10 percent and no excess reserves. If $1,000 is deposited into the bank, then, ceteris paribus,

Answer 1

$100 would be held as required reserves

$900 would be available to be given out as loans

Step-by-step explanation:

The required reserve is the minimum amount set by the Central bank that must be held as reserves by banks.

If $1000 is deposited and 10% is the required reserves, 0.1 × $1000 = $100 would be held as required reserves.

$1000 - $100 = $900 would be available to be given out as loans.

I hope my answer helps you.