Consider the following T-account for a bank:
$$\begin{array} { | l | l | }
\hline { \text { Assets } } & { \text { Liabilities } } \
\hline \text { Reserves } \$ 1,000 & \text { Deposits } \$ 5,000 \
\hline \text { Loans } \$ 4,000 \
\hline
\end{array}$$
If the required reserve ratio is 10 percent,the bank at this point can make no more loans.

Question

Consider the following T-account for a bank:
 $$\begin{array} { | l | l  | } 
\hline { \text { Assets } } & { \text { Liabilities } } \
\hline \text { Reserves }  \$ 1,000 & \text { Deposits }  \$ 5,000 \
\hline \text { Loans }  \$ 4,000  \
\hline
\end{array}$$ 
If the required reserve ratio is 10 percent,the bank at this point can make no more loans.

Quizplus · Accepted Answer

The bank has $1,000 in reserves and $5,000 in deposits, requiring $500 in reserves (10% of $5,000). With $1,000 in reserves, the bank has $500 excess reserves and can make additional loans.

Consider the Following T-Account for a Bank If the Required Reserve Ratio Is 10 Percent,the Bank at l