A bank currently has $45 million in deposits, $9 million in cash in the vault, $16 million on deposit with the Fed, and $4 million in government securities. The reserve ratio is 0.12 (as a decimal). A new deposit is made of $3 million. What is the maximum size loan the bank can make once the check clears?
A bank currently has $45 million in deposits, $9 million in cash in the vault, $16 million on deposit with the Fed, and $4 million in government securities. The reserve ratio is 0.12 (as a decimal). A new deposit is made of $3 million. What is the maximum size loan the bank can make once the check clears?
Chapter12: Money, Banking And The Financial System
Section: Chapter Questions
Problem 12QP
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![A bank currently has $45 million in deposits, $9 million in cash in the vault, $16 million on deposit with the
Fed, and $4 million in government securities. The reserve ratio is 0.12 (as a decimal). A new deposit is made
of $3 million.
What is the maximum size loan the bank can make once the check clears?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe2a0af8c-3463-4ea7-b055-3640776252de%2F8e9f2951-3ece-4fcd-ab52-c04045ea3953%2Fnckayjg_processed.png&w=3840&q=75)
Transcribed Image Text:A bank currently has $45 million in deposits, $9 million in cash in the vault, $16 million on deposit with the
Fed, and $4 million in government securities. The reserve ratio is 0.12 (as a decimal). A new deposit is made
of $3 million.
What is the maximum size loan the bank can make once the check clears?
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