The additional amount that could be loaned out because of deposit of Linda is $4000.
Answer: Option B.
Step-by-step explanation:
Bank can not loan out the entire amount it has with it. Certain amount is to be kept reserved with it for all times. This is known as required reserve ratio which is a particular ratio of the total deposits.
At the time of being totally loaned out, with twenty percent as the required reserve ratio, the bank can loan out extra amount when Linda deposits money. Since Linda Deposits $5000, twenty percent of this keeping as required reserve ratio, it can loan out $4000 more.