Suppose a transaction changes a bank's balance sheet as indicated in the following T-account,and the required reserve ratio is 10 percent.

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.

As a result of the transaction,the bank can make a maximum loan of

Quizplus · Accepted Answer

The bank received a deposit of $2,000, which increased its reserves by $2,000. The required reserve ratio is 10%, so the bank must keep 10% of the deposit as reserves, which is $200. The remaining $1,800 can be loaned out, and this represents the maximum loan the bank can make. Therefore, the correct answer is C.

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