Business, 12.02.2020 01:42 markeledwards699

If a bank has $200,000 of checkable deposits, a required reserve ratio of 20 percent, and it holds $80,000 in reserves, then what is the maximum deposit outflow it can sustain without altering its balance sheet?

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Answer from: Buttercream16

The maximum deposit outflow it can sustain without altering its balance sheet is $120,000.

Explanation:

Total Check-able Deposit is $200,000 and the required reserve ratio is 20% which is $40,000.

Required Reserve amount = $200,000 x 20% = $40,000

Reserve amount = $80,000

This bank has excess of $40,000 reserves from required reserve ratio.

Excess Reserve = $80,000 - $40,000 = $40,000

As we know the bank has been reporting their reserves on the Balance sheet so the amount that will be reported on the balance sheet is $80,000. So the limit to sustain without altering its balance sheet is $80,000. Deposits below this amount will result to alter the balance sheet.

Maximum Deposit outflow = Current Deposit - current reserve amount

Maximum Deposit outflow = $200,000 - $80,000

Maximum Deposit outflow = $120,000

Answer from: Quest

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Answer from: Quest

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If a bank has $200,000 of checkable deposits, a required reserve ratio of 20 percent, and it holds $...

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