Answer questions a and b.
a. If a bank had reserves of $30,000 and demand deposits of $200,000 (and no other deposits), how much could it lend out if it faced a required reserve ratio of
10 percent? _____________
15 percent? _____________
20 percent? _____________
b. If the bank then received a new $40,000 deposit in a customer’s demand deposit account, how much could it now lend out if it faced a required reserve ratio of
10 percent? _____________
15 percent? _____________
20 percent? _____________