Scenario 16-2.The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit of currency is the taz. Aggregate banking statistics show that collectively the banks of Tazi hold 300 million tazes of required reserves, 75 million tazes of excess reserves, have issued 7,500 million tazes of deposits, and hold 225 million tazes of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all money is on deposit at the bank.
-Refer to Scenario 16-2. Assuming the only other thing Tazian banks have on their balance sheets is loans, what is the value of existing loans made by Tazian banks?
A)6,900 million tazes
B)7,125 million tazes
C)7,350 million tazes
D)None of the above is correct.

Question

Quizplus · Accepted Answer

The total deposits are 7,500 million tazes. Required reserves are 300 million tazes, and excess reserves are 75 million tazes. The sum of reserves is 375 million tazes. The remaining amount, which is 7,500 - 375 = 7,125 million tazes, is the value of existing loans.