University National Bank Balance Sheet

-The above table has the balance of the University National Bank. All figures are in millions of dollars. The desired reserve ratio is 20 percent. What would be the total increase in loans at this bank if all unplanned reserves were loaned out?
A) $528 million
B) $352 million
C) $232 million
D) $0

Question

University National Bank Balance Sheet

-The above table has the balance of the University National Bank. All figures are in millions of dollars. The desired reserve ratio is 20 percent. What would be the total increase in loans at this bank if all unplanned reserves were loaned out?
A) $528 million 
B) $352 million 
C) $232 million 
D) $0

Quizplus · Accepted Answer

The total increase in loans is determined by the excess reserves, which are the reserves above the required reserves. If the reserve ratio is 20%, the bank must keep 20% of its deposits as reserves. The excess reserves can be loaned out, leading to an increase in loans.