Refer to the information provided in Table 25.5 below to answer the question(s) that follow.
Table 25.5
-Refer to Table 25.5. The required reserve ratio is 10%. If the Bloomington Bank is meeting its reserve requirement and has no excess reserves, its loans equal

Question

Refer to the information provided in Table 25.5 below to answer the question(s) that follow.
Table 25.5 
-Refer to Table 25.5. The required reserve ratio is 10%. If the Bloomington Bank is meeting its reserve requirement and has no excess reserves, its loans equal

Quizplus · Accepted Answer

The formula for calculating loans when a bank is meeting its reserve requirement is: loans = deposits × (1 - reserve ratio)
In this case, deposits are $1,760, and the reserve ratio is 10%, so the loans would be:
loans = $1,760 × (1 - 0.10)
loans = $1,760 × 0.9
loans = $1,584
However, since the question asks for the loans when the bank has no excess reserves (which means it is exactly meeting its reserve requirement), we need to subtract the required reserves from the loans:
required reserves = deposits × reserve ratio
required reserves = $1,760 × 0.10
required reserves = $176
loans = $1,584 - $176
loans = $1,408
Therefore, the closest option to this answer is C, $1,580.

Refer to the Information Provided in Table 25