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28 August, 17:26

Suppose the required reserve ratio is 20 percent. A $5 million deposit allows commercial banks to create as much as

a) $25 million.

b) $5 million.

c) $10 million.

d) $1 million.

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Answers (1)
  1. 28 August, 17:48
    0
    Option D. $1 million

    Step-by-step explanation:

    we know that

    Reserve Ratio, it is the percentage of deposits which commercial banks are required to keep as cash

    Find the 20% of $5 million

    20%=20/100=0.20

    0.20*5,000,000=$1,000,000

    so

    $1 million
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