Use the following balance sheet for Bank of the Universe,which is one of many banks in a banking system.
Table 13.2-Bank of the Universe Balance Sheet
-Refer to Table 13.2.With a required reserve ratio of 8 percent,Bank of the Universe can make new loans in the amount of:
A) $70,000.
B) $80,000.
C) $150,000.
D) $770,000.

Question

Use the following balance sheet for Bank of the Universe,which is one of many banks in a banking system.
Table 13.2-Bank of the Universe Balance Sheet 
-Refer to Table 13.2.With a required reserve ratio of 8 percent,Bank of the Universe can make new loans in the amount of:
A) $70,000. 
B) $80,000. 
C) $150,000. 
D) $770,000.

Quizplus · Accepted Answer

The bank can lend out the amount of its excess reserves. With a required reserve ratio of 8%, the bank must keep 8% of its deposits as reserves. If the bank has $150,000 in deposits, it must keep $12,000 (8% of $150,000) as reserves, allowing it to lend out $70,000 if it has $82,000 in total reserves.

Use the Following Balance Sheet for Bank of the Universe,which