CE 03-36

Answer CE 03-35 and CE 03-36 by referring to the following balance sheet of a banking system. Suppose the required reserve ratio is 20%.

If the government increases the required reserve ratio to 40%, which of the following statements about the above banking system is correct?

A. The amount of reserves will increase to $800.

B. The amount of deposits will not change.

C. The maximum amount of loans will be $750.

D. The maximum amount of deposits will be $1 600.