Table 29-3

$$\begin{array}{l}
\text { The First Bank of Rosw ell }\
\begin{array} { l l | l l }
& \text { Assets } & { \text { Liabilities } } \
\hline \text { Reserves } & \$ 30,000 & \text { Deposits } & \$ 200,000 \
\text { Loans } & 170,000 & &
\end{array}
\end{array}$$

-Refer to Table 29-3. If the bank faces a reserve requirement of 6 percent, then the bank
A)is in a position to make new loans equal to a maximum of $12,000.
B)is in a position to make new loans equal to a maximum of $18,000.
C)has excess reserves of $12,000.
D)has excess reserves of $30,000.

Question

Table 29-3
​
 $$\begin{array}{l}
\text { The First Bank of Rosw ell }\
\begin{array} { l l | l l } 
& \text { Assets } & { \text { Liabilities } } \
\hline \text { Reserves } & \$ 30,000 & \text { Deposits } & \$ 200,000 \
\text { Loans } & 170,000 & &
\end{array}
\end{array}$$ ​
​
​
-Refer to Table 29-3. If the bank faces a reserve requirement of 6 percent, then the bank
A)is in a position to make new loans equal to a maximum of $12,000.
B)is in a position to make new loans equal to a maximum of $18,000.
C)has excess reserves of $12,000.
D)has excess reserves of $30,000.

Quizplus · Accepted Answer

The reserve requirement is 6% of $200,000, which is $12,000. The bank has $30,000 in reserves, so it has excess reserves of $18,000, allowing it to make new loans up to that amount.

Table 29-3 ​ ​ ​ ​ -Refer to Table 29-3

Table 29-3

-Refer to Table 29-3