Question
Asked Apr 11, 2019
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(Table: Balance Sheet) Refer to the information in the tableBalance Sheet. If the reserve ratio is 25% and the bank is exactly meeting its reserve requirement and the bank is exactly meeting its reserve requirement, loans are:

 

 

A)

$60,000.

 

B)

$15,000.

 

C)

$5,000.

 

D)

$80,000.

Liabilities
Assets
$20,000
Deposits
Reserves
Loans
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Liabilities Assets $20,000 Deposits Reserves Loans

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Expert Answer

Step 1

Total deposit:

Total deposit can be calculated as follows.

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Step 2

Total deposit is $80,000. Thus, option ‘D’ is correct.

Step 3

Available amount for loan:

Available amount for loan can be ...

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