Multiple Choice
Assume that U.S.National Bank has no excess reserves and that the reserve ratio is 20 percent.If U.S.National borrows $5 million from a Federal Reserve Bank through a repo transaction, it can expand its loans by a maximum of
A) $5 million.
B) $1 million.
C) $25 million.
Correct Answer:
Verified
Correct Answer:
Verified
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