Assume a simplified banking system in which all banks are subject to a uniform reserve requirement of 20 percent. a bank that received a new checkable deposit of $10,000 would be able to extend new loans up to a maximum of $8000
<h3>What is the banking system?</h3>
Generally, A collection or network of organizations that work together to provide banking services is known as a banking system.
Commercial, national, and investment banks are the primary components of the most important categories of banking systems. Credit unions are often included in the definition of a banking system as well.
Reserve required = 20%, A commercial bank would retain reserves equal to twenty percent of one hundred thousand dollars, which is two thousand dollars.
Therefore, a commercial bank is unable to utilize the sum of $2000 for the purpose of loan creation.
A commercial bank has a lending capacity of = $10,000 minus $2,000, which is equal to $8000.
As a result, the amount of the loan that might be created is a maximum of $8000.
The appropriate response, therefore, is a. $8,000
Read more about the banking system
brainly.com/question/25247091
#SPJ1
