-In the balance sheet for the FBN bank above, the entries are in millions of dollars.. After FBN Bank loans the maximum amount it can, the loans have been spent, and the proceeds have been deposited in other banks, FBN Bank has unplanned reserves of
A) $360 million.
B) $280 million.
C) $100 million.
D) $0.

Question

-In the balance sheet for the FBN bank above, the entries are in millions of dollars.. After FBN Bank loans the maximum amount it can, the loans have been spent, and the proceeds have been deposited in other banks, FBN Bank has unplanned reserves of
A) $360 million. 
B) $280 million. 
C) $100 million. 
D) $0.

Quizplus · Accepted Answer

When a bank loans out the maximum amount it can, it utilizes all of its excess reserves, leaving it with no unplanned reserves. The process described, where loans are made and then deposited in other banks, does not change the total amount of reserves the bank started with; it merely redistributes those reserves within the banking system.

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