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Suppose the reserve requirement is 10 percent. If a bank has $5 million of checkable deposits and actual reserves of $500,000, the bank: Group of answer choices can safely lend out $50,000 cannot safely lend out more money can safely lend out $5 million. can safely lend out $500,000.

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Answer:

cannot safely lend out more money

Explanation:

Since the reserve requirement is 10% and the bank has $5 million of checkable deposits and actual reserves of $500,000.

Therefore the reserve requirement = 10% of checkable deposits = 0.1 × $5 million = $500000.

This means that the minimum reserve should be $500000. The amount of money that can be lend out = actual reserve - reserve requirement = $500000 - $500000 = 0

Therefore the bank cannot lend out more money

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