Suppose a bank has a 6 percent reserve ratio, $4000 in deposits, and it loans out all it can, given the reserve ratio. Which of the following describes the bank's assets?
A) It has $800 in reserves and $16,000 in loans.
B) It has $240 in reserves and $3760 in loans.
C) It has $240in reserves and $4000 in loans.
D) It has $800 in reserves and $3200 in loans.

Question

Quizplus · Accepted Answer

The bank must keep 6% of $4000 in reserves, which is $240. The rest, $3760, can be loaned out.

Suppose a Bank Has a 6 Percent Reserve Ratio, $4000