Multiple Choice
Assume that the desired reserve ratio is 20 percent.First National Bank has vault cash and deposits with the Bank of Canada of $80 million,loans and securities of $320 million,and demand deposits of $400 million.Which of the following statements about First National is the most accurate?
A) It could extend a maximum of $40 million of additional loans.
B) It could extend a maximum of $20 million of additional loans.
C) It could extend a maximum of $10 million of additional loans.
D) It is not in a position to extend additional loans.
Correct Answer:
Verified
Correct Answer:
Verified
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