University National Bank Balance Sheet
Assets Liabilities

-The above table has the balance of the University National Bank. All figures are in millions of dollars. The desired reserve ratio is 20 percent. What would be the total increase in loans at this bank if all excess reserves were loaned out?

Question

University National Bank Balance Sheet
Assets Liabilities
 
-The above table has the balance of the University National Bank. All figures are in millions of dollars. The desired reserve ratio is 20 percent. What would be the total increase in loans at this bank if all excess reserves were loaned out?

Quizplus · Accepted Answer

The total reserves are $580 million, and with a 20% reserve ratio, required reserves are $348 million (20% of $1,740 million in deposits). Excess reserves are $580 million - $348 million = $232 million, which can be loaned out.