Exhibit 19-1 Balance sheet of First Iliad State Bank $$\begin{array} { | l l | l l | }
\hline { \text { Assets } } & &{ \text { Liabilities } } \
\hline \text { Required reserves } & \$ 1,000,000 & \text { Demand deposits } & \$ 10,000,000 \
\text { Excess reserves } &0 & & \
\text { Loans } &\$ & & \\hline
\end{array}$$ In Exhibit 19-1, if the required reserve ratio is raised to 15 percent, First Iliad State will have to convert loans worth:

Question

Exhibit 19-1 Balance sheet of First Iliad State Bank $$\begin{array} { | l l | l l | } 
\hline  { \text { Assets } } & &{ \text { Liabilities } } \
\hline \text { Required reserves } & \$ 1,000,000 & \text { Demand deposits } & \$ 10,000,000 \
\text { Excess reserves } &0  & & \
 \text { Loans } &\$ & & \\hline
\end{array}$$ In Exhibit 19-1, if the required reserve ratio is raised to 15 percent, First Iliad State will have to convert loans worth:

Quizplus · Accepted Answer

With a new required reserve ratio of 15%, the bank needs to hold 15% of $10,000,000 in demand deposits as required reserves, which is $1,500,000. Since it already has $1,000,000 in required reserves, it needs an additional $500,000 to meet the new requirement.

Exhibit 19-1 Balance Sheet of First Iliad State Bank In Exhibit 19-1, If the Required Reserve Ratio Is Raised