Suppose a transaction changes a bank's balance sheet as indicated in the following T-account,and the required reserve ratio is 10 percent.
$$\begin{array} { | c | c | }
\hline \text { Assets } & \text { Liabilities } \
\hline \text { Reserves } + \$ 2,000 & \text { Deposits } + \$ 2,000 \
\hline
\end{array}$$
As a result of the transaction,the bank can make a maximum loan of

Question

Suppose a transaction changes a bank's balance sheet as indicated in the following T-account,and the required reserve ratio is 10 percent.
$$\begin{array} { | c | c | } 
\hline \text { Assets } & \text { Liabilities } \
\hline \text { Reserves } + \$ 2,000 & \text { Deposits } + \$ 2,000 \
\hline
\end{array}$$
As a result of the transaction,the bank can make a maximum loan of

Quizplus · Accepted Answer

The required reserve ratio is 10 percent, so the bank must keep 10 percent of its deposits as reserves. In this case, the deposits are $2,000, so the required reserves are 10% of $2,000, or $200. The bank already has $2,000 in reserves, so it has met its reserve requirement. This means that it can lend out the remaining amount of deposits, which is $2,000 - $200 = $1,800. Therefore, the maximum loan the bank can make is $1,800.

Suppose a Transaction Changes a Bank's Balance Sheet as Indicated