-In the balance sheet for the FBN bank above, the entries are in millions of dollars. If the desired reserve ratio is 10 percent, FBN Bank can loan an additional
A) $280 million.
B) $200 million.
C) $100 million.
D) $360 million.

Question

-In the balance sheet for the FBN bank above, the entries are in millions of dollars. If the desired reserve ratio is 10 percent, FBN Bank can loan an additional
A) $280 million. 
B) $200 million. 
C) $100 million. 
D) $360 million.

Quizplus · Accepted Answer

The desired reserve ratio is 10 percent, which means that FBN Bank must hold 10 percent of its deposits as reserves. The bank currently has $360 million in deposits, so it must hold $36 million in reserves. The bank currently has $280 million in loans, so it can loan an additional $280 million.

-In the Balance Sheet for the FBN Bank Above, the Entries