Suppose a bank has the following balance sheet:
$$\begin{array} { | c | l | l }
\hline{ \text { Assets } } & { \text { Liabilities } } \
\hline \text { Reserves } \$ 14,000 & \text { Deposits } \$ 100,000 \
\hline \text { Loans } \$ 90,000 & \text { Net Worth } \$ 4,000 \
\hline
\end{array}$$
If the required reserve ratio is 10 percent,how much excess reserves does the bank have? What is the maximum amount that the bank can expand its loans?

Question

Suppose a bank has the following balance sheet:
 $$\begin{array} { | c | l | l } 
\hline{ \text { Assets } } &  { \text { Liabilities } } \
\hline \text { Reserves } \$ 14,000 & \text { Deposits } \$ 100,000 \
\hline \text { Loans } \$ 90,000 & \text { Net Worth } \$ 4,000 \
\hline
\end{array}$$ 
If the required reserve ratio is 10 percent,how much excess reserves does the bank have? What is the maximum amount that the bank can expand its loans?

Quizplus · Accepted Answer

The Answer of Suppose a bank has the following balance sheet:
 $$\begin{array} { | c | l | l } 
\hline{ \text { Assets } } &  { \text { Liabilities } } \
\hline \text { Reserves } \$ 14,000 & \text { Deposits } \$ 100,000 \
\hline \text { Loans } \$ 90,000 & \text { Net Worth } \$ 4,000 \
\hline
\end{array}$$ 
If the required reserve ratio is 10 percent,how much excess reserves does the bank have? What is the maximum amount that the bank can expand its loans?

Suppose a Bank Has the Following Balance Sheet If the Required Reserve Ratio Is 10 Percent,how Much Excess