A commercial bank has excess reserves of $10,000 and a required reserve ratio of 20%. It grants a loan of $8,000 to a customer, who then writes out a check for $8,000 that is deposited in another bank. The first bank will find its reserves decrease by:

Question

Quizplus · Accepted Answer

When the loan is granted and the check is deposited in another bank, the first bank's reserves decrease by the full amount of the loan, which is $8,000.

A Commercial Bank Has Excess Reserves of $10,000 and a Required