If a bank has required reserves of $27 million and deposits of $90 million with a required reserve ratio of 30%,how much can the bank lend out?

Question

Quizplus · Accepted Answer

If the required reserve ratio is 30%, then the bank must hold 30% of its deposits as required reserves.

Required Reserves = Deposits x Required Reserve Ratio 
Required Reserves = $90 million x 0.30 
Required Reserves = $27 million

Therefore, the bank has $63 million ($90 million - $27 million) that it can lend out.

If a Bank Has Required Reserves of $27 Million and Deposits