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

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Answer #1

Maximum deposit outflow is

= [Reserves-(Required reserve ratio*Checkable deposits)] / (1-Required reserve ratio)

= [$80,000-(0.20*200,000)] / (1-0.20)

= $40,000/0.80

= $50,000


answered by: tothemoon
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