Money Bank has $500 million dollars in deposits and has 12 percent reserve ratio, how much can Money Bank lend

Money Bank can lend up to $4,167 million.

Explanation:

a) Data and Calculations:

Total deposits = $500 million

Reserve ratio = 12%

Money created by Money Bank = $500/12% = $4,166,666,667

b) The total amount of money which Money Bank can create and lend is dependent on its customers' deposits and the reserve ratio.  This amount can be calculated by dividing the total deposits by the reserve ratio.  This implies that the less the reserve ratio, the more money Money Bank can create and lend out to customers.

answer; ///the name of the central bank of the united states is called; ///the federal reserve known as the federal

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