Question

If the reserve rate is 3% and a bank receives a deposit of $16,000, how much of the $16,000 is the bank free to loan out?

Answer 1

Answer: C

Explanation:

Answer 2

The reserve rate is what the bank keeps. This means it can loan out ( 100% -3%) = 97% of the deposit.

16,000 x 0.97 = $15,520 can be loaned out.