Question

Suppose a commerical bank is subject to a 14 percent reserve requirement. The bank currently has $23,000 in checkable deposits and $11,000 in outstanding loans. What is the whole dollar amount of additional loans the bank may loan out. (If the bank is short on reserves enter your number as a negative number).

Answer 1

Answer:

$8,780

Explanation:

Checkable deposits = $23,000

Reserve ratio = 14%

Required reserves = $23,000*14% = $3,220

Outstanding loans = $11,000

So, the additional loans that a bank may loan out is $8,780 ($23,000 - $3,220 - $11,000).