Multiple Choice
Assume we have a simplified banking system in balance-sheet equilibrium. Also assume that all banks are subject to a uniform 10 percent reserve requirement and demand deposits are the only form of money. A commercial bank receiving a new demand deposit of $100 would be able to extend new loans in the amount of:
A) $10.
B) $90.
C) $100.
D) $1,000.
Correct Answer:
Verified
Correct Answer:
Verified
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