If a bank that is subject to a 10 percent required reserve ratio has $20,000 in excess reserves, it can make new loans of:
A) $2,000.
B) $18,000.
C) $20,000.
D) $200,000.

Name: If a bank that is subject to a 10 percent required reserve ratio has $20,000 in excess reserves, it can make new loans of: A) $2,000. B) $18,000. C) $20,000. D) $200,000.
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Question

Quizplus · Accepted Answer

Excess reserves are the funds a bank has beyond the required reserve ratio. If a bank has $20,000 in excess reserves, it can loan out the entire $20,000.

If a Bank That Is Subject to a 10 Percent