Suppose a Bank Has the Following Balance Sheet If the Required Reserve Ratio Is 10 Percent,how Much Excess

question 153

Essay

Suppose a bank has the following balance sheet:
$\begin{array}{|l|l|c|}\hline {\text { Assets }} & {\text { Liabilities }} \\\hline \text { Reserves } \$ 14,000 & \text { Deposits } \$ 100,000 \\\hline \text { Loans } \$ 90,000 & \text { Net Worth } \$ 4,000 \\\hline\end{array}$
If the required reserve ratio is 10 percent,how much excess reserves does the bank have? What is the maximum amount that the bank can expand its loans?

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