Suppose a bank has $400,000 in deposits,a minimum reserve requirement of 25 percent,and bank reserves of $100,000.Then the bank can make new loans in the amount of:

Question

Quizplus · Accepted Answer

The bank has $400,000 in deposits and a reserve requirement of 25%, which means it must hold $100,000 in reserves. Since the bank already has $100,000 in reserves, it cannot make any new loans without falling below the required reserve amount.

Suppose a Bank Has $400,000 in Deposits,a Minimum Reserve Requirement