-The above table gives the initial balance sheet for Mega Bank. Barney comes into the bank and deposits $50 of currency into his checking account. The desired reserve ratio is 3 percent. After Barney's deposit, but before any other actions occur, what volume of loans will be made by MegaBank if the bank wants more profit and holds no excess reserves?
A) $48.50
B) $33.00
C) $15.00
D) $50.00

Question

-The above table gives the initial balance sheet for Mega Bank. Barney comes into the bank and deposits $50 of currency into his checking account. The desired reserve ratio is 3 percent. After Barney's deposit, but before any other actions occur, what volume of loans will be made by MegaBank if the bank wants more profit and holds no excess reserves?
A) $48.50 
B) $33.00 
C) $15.00 
D) $50.00

Quizplus · Accepted Answer

When Barney deposits $50, the bank must keep 3% as reserves, which is $1.50. The remaining $48.50 can be loaned out, as the bank holds no excess reserves.

-The Above Table Gives the Initial Balance Sheet for Mega