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Suppose that the Fed requires banks to hold 10 percent of their deposits as reserves. A bank has $20,000 of excess reserves and then sells the Fed a Treasury bill for $9,000. How much does this bank now have to lend out if it decides to hold only required reserves?

Respuesta :

Answer:

Total amount that bank can lent out  = $29000

Explanation:

given data

hold = 10%

excess reserves = $20,000

sells Treasury bill = $9,000

solution

we know that here when bank sells off treasury bill to the Fed

it gets money or cash in the return

so this money is completely that can be lent out in the form of loan

so Total amount that bank that lent out will be here

Total amount that bank can lent out  = $20000 + $9000

Total amount that bank can lent out  = $29000

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