What is the maximum loan that the bank could extend


Discussion:

Supposed that the reserve requirement is ten percent and the balance sheet of the People's National Bank? Does the bank looks like the accompanying examples.

ASSETS                                  LIABILITIES

vault cash - $20,000checking deposits - $200,000

deposits at fed - 30,000net worth - 15,000

securities - 45,000

loans - 120,000

a)What are the required reserves of people national bank? Does the bank have any excess reserves? Required reserves are $20,000 and excess reserves are $30,000

b)What is the maximum loan that the bank could extend?  

c)Indicate how the banks' balance sheet would be altered if it extended this loan

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Microeconomics: What is the maximum loan that the bank could extend
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