If a bank has $100,000 of deposits,a required reserve ratio of 20 percent,and $40,000 in reserves,then the maximum deposit outflow it can sustain without altering its balance sheet is

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The bank is required to hold 20% of its deposits as reserves, which would be $20,000 ($100,000 * 20%). Since it currently has $40,000 in reserves, it has $20,000 more than required. If it loses deposits, it can lose up to $25,000 in deposits before its reserves fall to the required level, because losing $25,000 in deposits would reduce the required reserves by $5,000 (20% of $25,000), leaving the bank with the exact required reserve of $20,000.

If a Bank Has $100,000 of Deposits,a Required Reserve Ratio