Question

The Federal Reserve has set a 10% reserve ratio on all deposits.

Answer 1

Answer: $ 81,000

Step-by-step explanation:

After ACC Spellman Company deposits its $ 100,000 into Itsa Bank, Itsa will have $ 90,000 as maximum allowable amount to loan to company B Bugle since it has to reserve 10% of the $ 100,000 or $ 10,000.

When That There Bank receives the $ 90,000, it can  loan out $ 81,000 as a maximum amount and reserve $ 9000 ( 10% of 90,000) .

Answer 2

Answer:

Step-by-step explanation:

10% of $100,000

10/100*$100,000

0.1*$100,000

$10,000

Reserve ratio refers to a percentage of cash deposit that must be kept by the bank.

So, $10,000 is the amount to be kept by the bank.

To find the total amount loanable to Company B Bugle, Inc.

Total bank deposit- reserve ratio

$100,000-10,000

=$90,000 is the total amount loanable to Company B Bugle, Inc.

If Company B Bugle, Inc. deposit the total loan into the bank ($90,000)

The reserve ratio is 10% of $90,000

10/100*$90,000

0.1*$90,000

$9,000(reserve ratio)

Total loanable amount is

Total deposit-reserve ratio

$90,000-$9000

=$81,000

$81,000 could be loaned out to any other bank customer.

Due to multipliers effects, the bank could loan out a total of $171,000.($90,000 to Company B Bugle, Inc. and $81,000 to another bank customer).