The commercial banks in Lendland have
$\begin{array}{ll}
\text { Reserves } & \$ 400 \text { million } \
\text { Loans } & \$ 3,600 \text { million } \
\text { Deposits } & \$ 4,000 \text { million }\
\text { Total assets }& \$ 4,600 \text { million }\
\end{array}$
The banks hold no excess reserves.
a) Calculate the banksʹ reserve ratio.
b) An immigrant arrives in Lendland with $5 million, which he deposits in a bank. How much does the immigrantʹs bank lend initially?

Question

The commercial banks in Lendland have
 $\begin{array}{ll}
\text { Reserves } & \$ 400 \text { million } \
\text { Loans } & \$ 3,600 \text { million } \
\text { Deposits } & \$ 4,000 \text { million }\
\text { Total assets }& \$ 4,600 \text { million }\
\end{array}$ 
The banks hold no excess reserves.
a) Calculate the banksʹ reserve ratio.
b) An immigrant arrives in Lendland with $5 million, which he deposits in a bank. How much does the immigrantʹs bank lend initially?

Quizplus · Accepted Answer

The Answer of The commercial banks in Lendland have
 $\begin{array}{ll}
\text { Reserves } & \$ 400 \text { million } \
\text { Loans } & \$ 3,600 \text { million } \
\text { Deposits } & \$ 4,000 \text { million }\
\text { Total assets }& \$ 4,600 \text { million }\
\end{array}$ 
The banks hold no excess reserves.
a) Calculate the banksʹ reserve ratio.
b) An immigrant arrives in Lendland with $5 million, which he deposits in a bank. How much does the immigrantʹs bank lend initially?

The Commercial Banks in Lendland Have The Banks Hold No Excess Reserves