Exhibit 19-1 Balance sheet of First Iliad State Bank

-In Exhibit 19-1,if the required reserve ratio is lowered to 8 percent,then First Iliad State will:

Question

Exhibit 19-1 Balance sheet of First Iliad State Bank
 
-In Exhibit 19-1,if the required reserve ratio is lowered to 8 percent,then First Iliad State will:

Quizplus · Accepted Answer

The required reserve ratio is the percentage of deposits that banks must set aside as reserves. Lowering the required reserve ratio means that banks are required to hold less in reserves and can lend more. In this case, if the required reserve ratio is lowered to 8 percent, then First Iliad State Bank will be able to make additional loans worth $200,000 because it would only need to hold $80,000 in required reserves ($1,000,000 x 8%) instead of $280,000 ($1,000,000 x 28%) that is currently being held as reserves.

Exhibit 19-1 Balance Sheet of First Iliad State Bank