First National Bank ASSETS LIABILITIES Required reserves Loans Deposits $400,000 $368,000 ТОTAL ТОTAL Second National Bank ASSETS LIABILITIES Deposits Required reserves Loans TOTAL ТОTAL Third National Bank ASSETS LIABILITIES Deposits Required reserves Loans ТОTAL ТОTAL 1. (Table: Multiple Deposit Expansion) Refer to the table. For the multiple deposit expansion process described in this table, what is the maximum amount of loans that the Second National Bank can make if it holds only the required reserves? A) $338,560 B) $30,470.40 C). S308,089.60 D) $311,475.20

First National Bank ASSETS LIABILITIES Required reserves Loans Deposits $400,000 $368,000 ТОTAL ТОTAL Second National Bank ASSETS LIABILITIES Deposits Required reserves Loans TOTAL ТОTAL Third National Bank ASSETS LIABILITIES Deposits Required reserves Loans ТОTAL ТОTAL 1. (Table: Multiple Deposit Expansion) Refer to the table. For the multiple deposit expansion process described in this table, what is the maximum amount of loans that the Second National Bank can make if it holds only the required reserves? A) $338,560 B) $30,470.40 C). S308,089.60 D) $311,475.20

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

what is the maximum amount of loans that the Second National Bank can make if it holds only the required reserves?

First National Bank
ASSETS
LIABILITIES
Required reserves
Loans
Deposits
$400,000
$368,000
ТОTAL
ТОTAL
Second National Bank
ASSETS
LIABILITIES
Required reserves
Loans
ТОTAL
Deposits
TOTAL
Third National Bank
ASSETS
LIABILITIES
Required reserves
Loans
Deposits
ТОTAL
ТОTAL
1. (Table: Multiple Deposit Expansion) Refer to the table. For the multiple deposit
expansion process described in this table, what is the maximum amount of loans that the
Second National Bank can make if it holds only the required reserves?
A) $338,560
B) $30,470.40
C). S308,089.60
D) $311,475.20

Definition Definition Minimum amount that a commercial bank must hold in liquid assets in order to fulfill central bank regulations.

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