Answer:
Maximum money that bank can lend is $50,000
Explanation:
Given data:
Amount deposit is $10,000
reserve ratio is 0.20
Maximum money that bank can lend is calculated as
maximum money = (deposit - reserve)× money multiplier
money multiplier
and reserve is zero hence
maximum money = (10,000 - 0)× 5
maximum money = $50,000
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