Question

Macroeceomics Assets Liabilities and Net Worth Reserves $27,000 Checkable Deposits $110,000 Loans 50,000 Stock Shares 200,000 Securities 33,000 Property 200,000Refer to the accompanying balance sheet for the ABC National Bank. Assume the required reserve ratio is 20 percent. Assuming the bank loans out all of its remaining excess reserves as a checkable deposit and has a check cleared against it for that amount, its reserves and checkable deposits will now be:__________.

Answer 1

Answer:

Assuming the bank loans out all of its remaining excess reserves as a checkable deposit and has a check cleared against it for that amount, its reserves and checkable deposits will now be: $5000

Explanation:

Checkable deposit = 110,000  

Required reserve = 20% of 110,000

                              = 22,000

Reserves = $27,000

Excess reserve = 27,000 - 22,000

                          = $5000

So, this bank can safely expand its loans by a maximum of $5000 ( i.e, excess reserve)