When can a bank make loans?

Question

Quizplus · Accepted Answer

A bank can make loans when it has reserves greater than the required reserves, as this ensures that the bank has enough funds to cover any unexpected cash withdrawals by depositors. However, having the minimum amount of required reserves (option A) is not sufficient for a bank to make loans, as it does not provide a buffer for unexpected withdrawals. Option B is not necessarily true since banks cannot always predict every cash need of their depositors. Option C is irrelevant to the bank's ability to make loans. Option E is not applicable as there is enough information in the question stem.

When Can a Bank Make Loans