If First Guarantee Bank confronts a 10 percent reserve requirement and has excess reserves of $2,000,000,what is the maximum amount of additional loans that the bank can extend?
A)$200,000
B)$1,800,000
C)$2,000,000
D)$20,000,000

Question

Quizplus · Accepted Answer

The bank can loan out its excess reserves entirely, which is $2,000,000, as this is the amount available beyond the required reserves.

If First Guarantee Bank Confronts a 10 Percent Reserve Requirement