Consider the following T-account for a bank:
$\begin{array}{|ll|ll|}
\hline\text { Assets } && \text { Liabilities } \
\hline \text { Reserves } & \$ 1,000 & \text { Deposits } & \$ 5,000 \
\hline \text { Loans } & \$ 4,000 & &\
\hline
\end{array}$ If the required reserve ratio is 20 percent and the bank is holding no excess reserves,the bank at this point can make no more loans.

Question

Consider the following T-account for a bank:
 $\begin{array}{|ll|ll|}
\hline\text { Assets } && \text { Liabilities } \
\hline \text { Reserves } & \$ 1,000 & \text { Deposits } & \$ 5,000 \
\hline \text { Loans } & \$ 4,000 & &\
\hline
\end{array}$ If the required reserve ratio is 20 percent and the bank is holding no excess reserves,the bank at this point can make no more loans.

Quizplus · Accepted Answer

The T-account indicates that the bank has already reached its required reserve ratio of 20%, meaning it has no excess reserves to use for additional loans at this point. Therefore, the statement that the bank can make no more loans is true.

Consider the Following T-Account for a Bank If the Required Reserve Ratio Is 20 Percent and the }