When $1 million is deposited at a bank, the desired reserve ratio is 20 percent, and the bank chooses not to hold any excess reserves but makes loans instead, then, in the bank's final balance sheet, ________.

Question

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When $1 million is deposited at a bank, the bank's liabilities increase by $1 million because the deposit is an obligation the bank owes to the depositor. The desired reserve ratio of 20% means the bank must keep $200,000 (20% of $1 million) as reserves and can loan out the rest ($800,000), but this does not change the initial increase in liabilities due to the deposit.

When $1 Million Is Deposited at a Bank, the Desired