Suppose a bank has $200,000 in deposits,a required reserve ratio of 25 percent,and bank reserves of $100,000.Then this bank can make new loans in the amount of

Name: Suppose a bank has $200,000 in deposits,a required reserve ratio of 25 percent,and bank reserves of $100,000.Then this bank can make new loans in the amount of
Brand: Quizplus
Rating: 4.8 (45 reviews)

Question

Quizplus · Accepted Answer

The bank must keep 25% of $200,000 in reserves, which is $50,000. Since it has $100,000 in reserves, it can loan out the excess reserves of $50,000.

Suppose a Bank Has $200,000 in Deposits,a Required Reserve Ratio