Table 29-5.
-Refer to Table 29-5. If the bank faces a reserve requirement of 6 percent, then the bank
A)is in a position to make a new loan of $12,000.
B)is in a position to make a new loan of $18,000.
C)has excess reserves of $12,000.
D)None of the above is correct.

Question

Table 29-5. 
-Refer to Table 29-5. If the bank faces a reserve requirement of 6 percent, then the bank
A)is in a position to make a new loan of $12,000. 
B)is in a position to make a new loan of $18,000. 
C)has excess reserves of $12,000. 
D)None of the above is correct.

Quizplus · Accepted Answer

The bank can make a new loan of $18,000 because it only needs to keep 6% of its deposits as reserves, and the rest can be loaned out.

Table 29-5. -Refer to Table 29-5. If the Bank Faces a Reserve