Assume First Central Bank has a desired reserve ratio of 15 percent;$80,000 in total deposits,loans equal to $60,000,and has $20,000 in actual reserves.First Central can make additional loans totaling
A)$8,000.
B)$12,000.
C)$20,000.
D)$60,000.
E)$80,000.

Question

Quizplus · Accepted Answer

The desired reserve ratio is 15%, so the bank should hold $80,000 x 0.15 = $12,000 in reserves. The bank currently has $20,000 in reserves, so it can make additional loans totaling $20,000 - $12,000 = $8,000.

Assume First Central Bank Has a Desired Reserve Ratio of 15