$\begin{array}{|l|l|}
\hline {\text { Assets }} &{\text { Liabilities }} \
\hline \text { Reserves } & \
\$ 400 & \text { Deposits } \
\text { Loans } & \$ 1,200 \
\$ 800 & \
\text { Total } & \text { Total } \
\$ 1,200 & \$ 1,200\
\hline
\end{array}$
-In the balance sheet above,the entries are in millions of dollars for the FBN Bank.After FBN Bank loans the maximum amount it can,the loans have been spent,and the proceeds have been deposited in other banks,FBN Bank has excess reserves of

Question

$\begin{array}{|l|l|}
\hline {\text { Assets }} &{\text { Liabilities }} \
\hline \text { Reserves } & \
\$ 400 & \text { Deposits } \
\text { Loans } & \$ 1,200 \
\$ 800 & \
\text { Total } & \text { Total } \
\$ 1,200 & \$ 1,200\
\hline 
\end{array}$ 
-In the balance sheet above,the entries are in millions of dollars for the FBN Bank.After FBN Bank loans the maximum amount it can,the loans have been spent,and the proceeds have been deposited in other banks,FBN Bank has excess reserves of

Quizplus · Accepted Answer

The bank's reserves are $400 million, and the required reserves are typically a fraction of deposits. If the reserve requirement is 10%, the required reserves would be $120 million (10% of $1,200 million). After lending out the maximum, the bank would have no excess reserves left.

-In the Balance Sheet Above,the Entries Are in Millions of \text