Consider the following T-account for a bank:
If the required reserve ratio is 20 percent,the bank at this point can make no more loans.

Question

Consider the following T-account for a bank:
  If the required reserve ratio is 20 percent,the bank at this point can make no more loans.

Quizplus · Accepted Answer

The fact that the required reserve ratio is 20 percent implies that the bank must hold 20% of their deposits in reserve and can lend out the remaining 80%. Based on the T-account, if the bank has reached the required reserve amount, they have already lent out the maximum amount that they are able to according to their reserves. Therefore, they can make no more loans, making the statement true.

Consider the Following T-Account for a Bank