Question

If a bank has total reserves of $300,000 and $2,000,000 in deposits, how much money can it lend if the required reserve ratio is

Instructions: Enter your responses as a whole number.

5 percent?
$

15 percent?
$

Answer 1

It can 0$

Step-by-step explanation:

(a) Deposit $2,000,000

Reserve $300,000

Reserve ratio

.: Requined. reserve = Total deposit x

= $2,000,000

$100,000

· Excess

reserve =

$300,000 - $100,000

$200,000

lend a of $200,000

Can

Now ratio = 15%.

Read. reserve $2,000,0 1000 X 0.1S $300,000

Exuss

reserve =

$300,000 -

$300,00

=0

lend

$0