Question

a commercial bank is facing the conditions given above If the reserve requirement is 12 percent and the bank does not sell any of its securities, the maximum amount of additional lending this bank can undertake is (A) $15,000 (B) $12,000 (C) $3,000 (D) $1,800 (E) $0

Answer 1

The question is about the maximum additional lending a commercial bank can undertake with a 12% reserve requirement. Without information on the bank's deposits or reserves, we can't calculate the exact additional lending value.

Step-by-step explanation:

The student is asking how much additional lending a commercial bank can undertake given a reserve requirement of 12%. To calculate this, we use the formula for the maximum loan amount, which is: maximum loan amount = excess reserves / reserve requirement ratio. If the bank does not sell any of its securities, and assuming it has excess reserves, we calculate the potential additional loans by dividing any excess reserves by the reserve requirement of 12% (0.12). Unfortunately, without the information on the amount of the bank's deposits or current reserves, we cannot compute the exact figure. Therefore, based on the data provided, we cannot conclusively determine the correct answer among the provided options (A) $15,000, (B) $12,000, (C) $3,000, (D) $1,800, (E) $0.

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