A bank is "loaned up" when
A) legal reserves are zero.
B) excess reserves are zero.
C) primary reserves are zero.
D) required reserves are zero.

Question

Quizplus · Accepted Answer

When a bank is "loaned up," it means that all its excess reserves have been lent out as loans. Therefore, excess reserves are zero. Legal reserves refer to the total amount of reserves a bank holds, including required reserves and excess reserves. Primary reserves refer to the most liquid reserves, such as cash and reserves held at the central bank. Required reserves are the minimum amount of reserves that a bank is required to hold by law. None of these terms specifically indicate that a bank is "loaned up."

A Bank Is "Loaned Up" When