The Fed sets a Reserve Requirement of 20%. A citizen takes $5000 from their cash holdings and places the money into a bank. Based on this action What is the initial amount the bank can lend out based on the deposit?
20 percent times 5000 is equals to 1000 dollars. 5000 take away 1000 is equal to 4000 dollars that the initial amount the bank can lend out based on the deposit.
