If the actual reserve-deposit ratio equals eight per cent and the desired reserve-deposit ratio for this bank is 10 per cent, the bank should:

Question

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The bank should stop making loans because its actual reserve-deposit ratio is lower than the desired reserve-deposit ratio. By stopping loans, the bank can reduce its deposits, which lowers the required reserves and brings it closer to the desired reserve-deposit ratio. Sending extra reserves to the central bank or requesting customers to withdraw deposits are not necessary in this situation, and doing nothing may lead to potential solvency issues.

If the Actual Reserve-Deposit Ratio Equals Eight Per Cent and the Desired