Ask Question
14 July, 18:27

A bank has $200 million in demand deposits and $150 million in reserves. The reserve ratio is 20 percent. What is the maximum amount of loans the bank can make from its reserves?

+4
Answers (1)
  1. 14 July, 18:46
    0
    maximum amount of loan bank that make reserve is $110 million

    Explanation:

    given data

    demand deposits = $200 million

    reserve = $150 million

    reserve ratio = 20%

    to find out

    maximum amount of loan bank can make reserve

    solution

    we get here excess reserve that is

    excess reserve = deposits * reserve ratio ... 1

    excess reserve = $200 million * 20%

    excess reserves is $40 million

    so maximum amount of loan bank that make reserve is = $150 million - $40 million

    maximum amount of loan bank that make reserve is $110 million
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “A bank has $200 million in demand deposits and $150 million in reserves. The reserve ratio is 20 percent. What is the maximum amount of ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers