Suppose that initially a bank has excess reserves of $800 and the reserve ratio is 20%. Then Andy deposits $1,000 of cash into his checkingaccount and the bank lends $500 to Molly. That bank can lend an additionalO A. $800.B. $2,400.C. $200.D. $1200E. $1,100.

Excess reserve is extra fund available with banks which is above the required reserve fund. Banks…

Suppose that initially a bank has excess reserves of $800 and the reserve ratio is 20%. Then Andy deposits $1,000 of cash into m account and the bank lends $500 to Molly. That bank can lend an additional A. $800. B. $2,400. C. $200. D. $1200 E. $1,100.

Suppose that initially a bank has excess reserves of $800 and the reserve ratio is 20%. Then Andy deposits $1,000 of cash into m account and the bank lends $500 to Molly. That bank can lend an additional A. $800. B. $2,400. C. $200. D. $1200 E. $1,100.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose that initially a bank has excess reserves of $800 and the reserve ratio is 20%. Then Andy deposits $1,000 of cash into his checking
account and the bank lends $500 to Molly. That bank can lend an additional
O A. $800.
B. $2,400.
C. $200.
D. $1200
E. $1,100.

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