Suppose a bank has the following balance sheet:
$\begin{array}{|lr|lr|}
\hline\text { Assets } && \text { Liabilities } \
\hline \text { Reserves } & \$ 14,000 & \text { Deposits } & \$ 100,000 \
\hline \text { Loans } & \$ 90,000 & \text { Net Worth } & \$ 4,000\
\hline
\end{array}$
If the required reserve ratio is 10 percent,how much excess reserves does the bank have? What is the maximum amount that the bank can expand its loans?

Question

Suppose a bank has the following balance sheet:
 $\begin{array}{|lr|lr|}
\hline\text { Assets } && \text { Liabilities } \
\hline \text { Reserves } & \$ 14,000 & \text { Deposits } & \$ 100,000 \
\hline \text { Loans } & \$ 90,000 & \text { Net Worth } & \$ 4,000\
\hline
\end{array}$
 If the required reserve ratio is 10 percent,how much excess reserves does the bank have? What is the maximum amount that the bank can expand its loans?

Quizplus · Accepted Answer

The Answer of Suppose a bank has the following balance sheet:
 $\begin{array}{|lr|lr|}
\hline\text { Assets } && \text { Liabilities } \
\hline \text { Reserves } & \$ 14,000 & \text { Deposits } & \$ 100,000 \
\hline \text { Loans } & \$ 90,000 & \text { Net Worth } & \$ 4,000\
\hline
\end{array}$
 If the required reserve ratio is 10 percent,how much excess reserves does the bank have? What is the maximum amount that the bank can expand its loans?

Suppose a Bank Has the Following Balance Sheet If the Required Reserve Ratio Is 10 Percent,how Much Excess