Question

In exhibit 15-7, if mr. brown pays out all of the proceeds of the loan to mr. john white who is going to make the renovations of the restaurant, the lower walloon national bank will now have: $6,000 in reserves, $4,000 in loans, and $10,000 in checkable deposits. $10,000 in reserves, $8,000 in loans, and $2,000 in checkable deposits. $2,000 in reserves, $4,000 in loans, and $10,000 in checkable deposits. $2,000 in reserves, $8,000 in loans, and $10,000 in checkable deposits. $0 in reserves, $8,000 in loans, and $10,000 in checkable deposits.

Answer 1

The Lower Wallon National bank will have ;

$2000 reserve, $8000 in loans and $10,000 in checkable deposit.

Explanation:

To check for this, we are going solve it by saying;

The required reserve ratio = 20% so 20% of 10,000 = $2000 in reserve

10,000 - 2000 = $8000 in loans

$10,000 in checkable deposit.

therefore; $ 10,000 is in checkable deposit.