Question

New loans made = 1000. Fractional reserve ratio is 1/3, by how much deposits will grow?

A 3000 Correct Answer Incorrect Answer
B 300 Correct Answer Incorrect Answer
C 5000 Correct Answer Incorrect Answer
D 6000 Correct Answer Incorrect Answer
E None of these Correct Answer Incorrect Answer

Solution

Deposits will grow by 1000 / (1/3) = 3000

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