Suppose a bank has $600,000 in deposits,a required reserve ratio of 5 percent,and bank reserves of $90,000.Then the bank can make new loans in the amount of

Question

Quizplus · Accepted Answer

The maximum amount of new loans the bank can make is the excess reserves, which is calculated as follows: 
Excess reserves = Bank reserves - Required reserves 
Excess reserves = $90,000 - 0.05($600,000) 
Excess reserves = $90,000 - $30,000 
Excess reserves = $60,000 
Therefore, the bank can make new loans in the amount of $60,000.

Suppose a Bank Has $600,000 in Deposits,a Required Reserve Ratio