Use the following balance sheet for Bank of the Universe,which is one of many banks in a banking system.
Table 13.2-Bank of the Universe Balance Sheet
-Refer to Table 13.2.With a required reserve ratio of 10 percent,Bank of the Universe can make new loans in the amount of:
A) $10,000.
B) $50,000.
C) $100,000.
D) $1,000,000.

Question

Use the following balance sheet for Bank of the Universe,which is one of many banks in a banking system.
Table 13.2-Bank of the Universe Balance Sheet 
-Refer to Table 13.2.With a required reserve ratio of 10 percent,Bank of the Universe can make new loans in the amount of:
A) $10,000. 
B) $50,000. 
C) $100,000. 
D) $1,000,000.

Quizplus · Accepted Answer

With a required reserve ratio of 10 percent, the bank can lend out 90% of any deposits it receives. If the bank receives a deposit, it must keep 10% of it as reserves and can lend out the rest. The question does not provide specific details from Table 13.2, but based on the options given, if the bank can make new loans in the amount of $50,000, it implies that this is the amount it can lend out after keeping the required reserves from a new deposit. This suggests that the bank received a deposit large enough that after setting aside 10% as required reserves, $50,000 remains available to be lent out.

Use the Following Balance Sheet for Bank of the Universe,which