Refer to the information provided in Table 10.4 below to answer the questions that follow.
Table 10.4
-Refer to Table 10.4. First Charter Bank could make additional, first round loans of $400,000 if the required reserve ratio were

Question

Refer to the information provided in Table 10.4 below to answer the questions that follow.
Table 10.4 
-Refer to Table 10.4. First Charter Bank could make additional, first round loans of $400,000 if the required reserve ratio were

Quizplus · Accepted Answer

The additional, first round loans that First Charter Bank could make amount to $400,000, which implies that this is the amount of excess reserves generated by a deposit. If the required reserve ratio is 10%, then the excess reserves of $400,000 represent 10% of the total deposit that could be supported by these reserves, indicating that the bank received a deposit of $4,000,000 ($400,000 / 0.10). At a 10% reserve requirement, the bank must hold 10% in reserves and can loan out the remaining 90%, which in this case would be $400,000, indicating that the reserve requirement that allows for an additional $400,000 in loans is 10%.

Refer to the Information Provided in Table 10