If a bank has $200,000 of deposits,a required reserve ratio of 20 percent,and $80,000 in reserves,then the maximum deposit outflow it can sustain without altering its balance sheet is

Question

Quizplus · Accepted Answer

The maximum deposit outflow is equal to the excess reserves, which is equal to the reserves minus the required reserves. In this case, the excess reserves are $80,000 - $40,000 = $40,000. Therefore, the maximum deposit outflow is $40,000.

If a Bank Has $200,000 of Deposits,a Required Reserve Ratio