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.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter13: Money And The Financial System

Section: Chapter Questions

Problem 2.8P

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