Hello:

I got this answer incorrect, my answer was a. a. it must increase its required reserves by more than $150.

but the right answer is c. c. it will be able to make new loans up to a maximum of $880.

Give me a hand please? Thanks

If the reserve requirement is 12 percent and banks desire to hold no excess reserves, when a bank receives a new deposit of $1,000,

a. it must increase its required reserves by more than $150.

b. its total reserves initially increase by $120.

c. it will be able to make new loans up to a maximum of $880.

d. None of the above is correct.