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How much can the bank lend based on the $ 1000 deposit after it has met the statutory reserve requirement?

a. $ 1000
b. $ 900
c. $ 950
d. 0

1 Answer

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Final answer:

With a 0% reserve requirement in effect, the bank can lend out the entire $1000 deposit, making the correct answer 'd. 0'.

Step-by-step explanation:

Based on the information regarding the Federal Reserve's reserve requirement policies, the most accurate answer for the amount a bank can lend after it has met the statutory reserve requirement would be 'd. 0'. As of March 2020, due to the pandemic-induced recession, the reserve requirements were reduced to 0%, effectively eliminating the requirement for all depository institutions. Therefore, with a $1000 deposit and a 0% reserve requirement, the bank would not be obligated to keep any of that deposit as reserves and could lend out the entire amount.

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