If a bank has $200,000 of checkable deposits,a required reserve ratio of 20 percent,and it holds $80,000 in reserves,then the maximum deposit outflow it can sustain without altering its balance sheet is
A)$50,000.
B)$40,000.
C)$30,000.
D)$25,000.

Question

Quizplus · Accepted Answer

The maximum deposit outflow that the bank can sustain without altering its balance sheet is $50,000. This is because the bank is required to hold 20% of its checkable deposits in reserves, and it currently holds $80,000 in reserves. If deposits outflow by $50,000, the bank will still have $30,000 in reserves, which is 20% of its remaining checkable deposits of $150,000.

If a Bank Has $200,000 of Checkable Deposits,a Required Reserve