The table below shows the balance sheet of Countybank.If the required reserve ratio is 10 percent,this bank alone can now increase its lending by _____.
Table 14.2
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COUNTYBANK
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$\begin{array}{|l|l|l|l|}
\hline\text { Assets } && \text { Liabilities and Net Worth } \
\hline & & \
\hline \text { Cash } & \$ 1,000 & \text { Checkable deposits }&\$1,000\\hline
\end{array}$

Question

Quizplus · Accepted Answer

Given a required reserve ratio of 10%, Countybank must keep 10% of its checkable deposits as reserves. With checkable deposits of $1,000, the required reserves are $100 (10% of $1,000). Since the bank has $1,000 in cash (assets), it can use the excess over the required reserves for lending. The excess reserves are $900 ($1,000 in cash - $100 required reserves), which is the amount the bank can now increase its lending by.

The Table Below Shows the Balance Sheet of Countybank A)$1,000 B)$10,000 C)$0 D)$90 E)$900

The Table Below Shows the Balance Sheet of Countybank A)$1,000
B)$10,000
C)$0
D)$90
E)$900