Exhibit 14-2
Exhibit 14-2
$$\begin{array}{l}
\text { COUNTYBANK}\
\begin{array} {lll }
&\text { assets}&&\text {Liabilities and Net Worth }\
\hline \text {cash }&&\text {+\$ 1,000 Checkable deposits }&&+\$1,000\
\end{array}
\end{array}$$
-Refer to Exhibit 14-2.By how much can this bank alone now increase its lending? Assume a required reserve ratio of 10 percent.

Question

Exhibit 14-2
Exhibit 14-2
$$\begin{array}{l}
\text { COUNTYBANK}\
\begin{array} {lll } 
 &\text { assets}&&\text {Liabilities and Net Worth }\
\hline \text {cash }&&\text {+\$ 1,000 Checkable deposits }&&+\$1,000\
\end{array}
\end{array}$$
-Refer to Exhibit 14-2.By how much can this bank alone now increase its lending? Assume a required reserve ratio of 10 percent.

Quizplus · Accepted Answer

The bank can increase its lending by the amount of excess reserves it has. With a required reserve ratio of 10%, the bank must keep $100 (10% of $1,000) as reserves, leaving $900 available for lending.

Exhibit 14-2 Exhibit 14-2 -Refer to Exhibit 14-2

Exhibit 14-2
Exhibit 14-2 -Refer to Exhibit 14-2