Refer to the information provided in Scenario 25.1 below to answer the question(s) that follow.
SCENARIO 25.1: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up.
-Refer to Scenario 25.1. If the required reserve ratio were changed to 10%, total loans of Bank No. 2 will change to

Question

Refer to the information provided in Scenario 25.1 below to answer the question(s) that follow.
SCENARIO 25.1: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up. 
-Refer to Scenario 25.1. If the required reserve ratio were changed to 10%, total loans of Bank No. 2 will change to

Quizplus · Accepted Answer

If the required reserve ratio is 10%, Bank No. 2 will need to hold 10% of its deposits as reserves. Assuming the initial deposits are $90,000, the required reserves would be $9,000. Therefore, the total loans would be $90,000 - $9,000 = $81,000.

Refer to the Information Provided in Scenario 25