Suppose a bank has $100,000 in deposits,a minimum reserve requirement of 5 percent,and bank reserves of $12,000.Then it can make new loans in the amount of:

Question

Quizplus · Accepted Answer

With a minimum reserve requirement of 5 percent, the bank must keep $5,000 (5% of $100,000) in reserves. Since it has $12,000 in reserves, it can loan out the difference, which is $7,000 ($12,000 - $5,000).

Suppose a Bank Has $100,000 in Deposits,a Minimum Reserve Requirement