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. Suppose the bank faces a reserve requirement of 10 percent. Starting from the situation as depicted by the T-account, a customer deposits an additional $60,000 into his account at the bank. If the bank takes no other action it will
A)have $64,000 in excess reserves.
B)have $4,000 in excess reserves.
C)be in a position to make new loans equal to a maximum of $6,000.
D)be unable to make any new loans.

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. Suppose the bank faces a reserve requirement of 10 percent. Starting from the situation as depicted by the T-account, a customer deposits an additional $60,000 into his account at the bank. If the bank takes no other action it will
A)have $64,000 in excess reserves.
B)have $4,000 in excess reserves.
C)be in a position to make new loans equal to a maximum of $6,000.
D)be unable to make any new loans.

Quizplus · Accepted Answer

The bank initially has $30,000 in reserves and $200,000 in deposits, meeting the 10% reserve requirement. With an additional $60,000 deposit, total deposits become $260,000, requiring $26,000 in reserves. The bank now has $90,000 in reserves, resulting in $64,000 in excess reserves ($90,000 - $26,000).

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

Table 29-3

-Refer to Table 29-3