Answer:
The bank can increase loans by a maximum of $1500.
Explanation:
There is no excess reserve.
The reserve requirement is 25%.
The total reserves are increased by $2,000.
The required reserve will be 25% of $2,000.
=(25/100)*2000
=0.25*2000
=500
So, the required reserve is $500.
The loan can be increased by
=Increase in total reserve-required reserve
=$(2000-500)
=$1,500
So, the banks can increase loans up to $1,500.
