$\text { Assets }\quad\quad\quad\quad\quad\quad\quad \text { Liabilities }$
$\begin{array}{|lc|lc|}
\hline \text { Reserves } & \$ 30 &\text { Deposits }&\$1,000\\text { Loans }&\$970\
\text { Total } & \$ 1,000&\text { Total }&\$1,000 \
\hline
\end{array}$
-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) $33.00
B) $48.50
C) $15.00
D) $50.00

Question

$\text { Assets }\quad\quad\quad\quad\quad\quad\quad \text { Liabilities }$
$\begin{array}{|lc|lc|}
\hline \text { Reserves } & \$ 30 &\text { Deposits }&\$1,000\\text { Loans }&\$970\
\text { Total } & \$ 1,000&\text { Total  }&\$1,000 \
\hline
\end{array}$
-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) $33.00
B) $48.50
C) $15.00
D) $50.00

Quizplus · Accepted Answer

After Barney's deposit, reserves increase to $80. With a 3% reserve ratio on $1,050 in deposits, required reserves are $31.50. Thus, $48.50 can be loaned out.

Assets Liabilities \text { Assets }\quad\quad\quad\quad\quad\quad\quad \text { Liabilities } Assets Liabilities -The Above Table Gives the Initial Balance Sheet for Mega

$\text { Assets }\quad\quad\quad\quad\quad\quad\quad \text { Liabilities }$ -The Above Table Gives the Initial Balance Sheet for Mega