Scenario 10.2
Imagine that Kristy deposits $10,000 of currency into her chequing account deposit at Bank A and that the desired reserve ratio is 20%.
-Refer to Scenario 10.2.As a result of Kristy's deposit, Bank A can make a maximum loan of

Question

Quizplus · Accepted Answer

The maximum loan that Bank A can make is calculated as the excess reserves, which is the amount left in the bank's vault after the required reserve has been kept. In this case, the required reserve is 20% of $10,000, which is $2,000. Therefore, the excess reserves are $10,000 - $2,000 = $8,000. The bank can make a maximum loan of $8,000, which is the answer choice B.

Scenario 10.2 Imagine That Kristy Deposits $10,000 of Currency into Her Chequing