Question

If the reserve rate is 8% and a bank receives a deposit of $7000, how much of

the $7000 is the bank free to lend?

Answer 1

The bank can lend $6440 from the deposit amount of $7000

Explanation:

Given deposit amount:

$7000

Since the reserve rate is 8%, 8% of 7000 will be reserved by the bank. The bank can lend the remaining amount.

Reserved amount = 7000 * (8/100)

= $560

Amount the bank can lend = 7000-560 = $6440

The bank can lend $6440 from the deposit amount of $7000 ..