-The table above represents a bank's T-account.Suppose it is the only bank in town and individuals in town hold no cash.Assuming the reserve ratio is 10%,what will be the bank's loans at the end of the money creation process?
A) $180,000.
B) $200,000.
C) $1,800,000.
D) $2,000,000.
E) $2,200,000.

Question

-The table above represents a bank's T-account.Suppose it is the only bank in town and individuals in town hold no cash.Assuming the reserve ratio is 10%,what will be the bank's loans at the end of the money creation process?
A) $180,000. 
B) $200,000. 
C) $1,800,000. 
D) $2,000,000. 
E) $2,200,000.

Quizplus · Accepted Answer

The bank's initial reserves are $200,000. With a reserve ratio of 10%, the bank can lend out $1,800,000 (10% of $1,800,000 is $200,000).

-The Table Above Represents a Bank's T-Account