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AP® Macroeconomics

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T-Accounts and Excess Reserve

APMACR-VDV6JX

Consider the following T-Account.

What is the maximum loan the bank can make without violating Federal Reserve policy if the Reserve Requirement Rate is a flat 20% no matter the size of the bank or its deposits?

Assets Liabilities
\$80 Million Loans Receivable \$150 Million Checkable Deposits
\$10 Million Vault Cash \$20 Million Savings Deposits
\$90 Million Federal Reserve Deposits \$10 Million Owner's Equity
A

$8 million

B

$70 Million

C

$66 million

D

$10 Million

E

$180 million