Refer to the information provided in Scenario 10.1 below to answer the questions that follow.
SCENARIO 10.1: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up.
-Refer to Scenario 10.1. If the required reserve ratio were changed to 10%, total loans of Bank No. 2 will change to

Question

Refer to the information provided in Scenario 10.1 below to answer the questions that follow.
SCENARIO 10.1: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up. 
-Refer to Scenario 10.1. If the required reserve ratio were changed to 10%, total loans of Bank No. 2 will change to

Quizplus · Accepted Answer

With a required reserve ratio of 10%, Bank No. 2 must keep 10% of its deposits as reserves. If it initially has $9,000 in reserves (from the scenario), these reserves now represent 10% of its total deposits, making the total deposits $90,000. Since the bank loans out the rest, total loans would be $90,000 (total deposits) - $9,000 (reserves) = $81,000.

Refer to the Information Provided in Scenario 10