Table 25-3

-Refer to Table 25-3. Consider the above simplified balance sheet for a bank. If the required reserve ratio is 10 percent, the bank can make a maximum loan of

Question

Table 25-3
 
-Refer to Table 25-3. Consider the above simplified balance sheet for a bank. If the required reserve ratio is 10 percent, the bank can make a maximum loan of

Quizplus · Accepted Answer

The bank must keep 10% of its deposits as reserves. If the bank has $20,000 in deposits, it must keep $2,000 as reserves, allowing it to loan out the remaining $18,000. If the bank already has $16,000 in loans, it can make an additional loan of $2,000.

Table 25-3 -Refer to Table 25-3. Consider the Above Simplified Balance Sheet