If Fiona deposits $2,000 into a savings account, how much money can the bank lend if the reserve ratio is 20 percent?

To determine how much money the bank can lend out after Fiona deposits $2,000 with a reserve ratio of 20 percent, it's essential to understand what the reserve ratio means. The reserve ratio is the percentage of deposits that the bank is required to keep on hand and not loan out.

In this case, with a reserve ratio of 20 percent, the bank must hold 20 percent of Fiona's deposit in reserve. First, you would calculate the reserve amount:

Reserve = Deposit x Reserve Ratio

Reserve = $2,000 x 0.20

Reserve = $400

Next, to find out how much money the bank can lend, you subtract the reserve from the total deposit:

Money to lend = Deposit - Reserve

Money to lend = $2,000 - $400

Money to lend = $1,600

Therefore, the bank can lend out $1,600. This understanding of deposit reserves and the relation to lending capacities is critical in personal finance and banking operations.