Question

The banking system of Canada has a reserve requirement of 20 percent. It has $80,000 in reserves, $310,000 in loans, $50,000 in property and $110,000 in equity.

1. How much its deposit?

2. How much additional loans to make?

Answer 1

Answer:
1) As bank system of Canada has a resever requirement of 20% which is $80,000 for this bank.
    So, its total deposit would be = (80,000 * 100 ) / 20
    = 80,000 * 5
    = $400,000
   Hence Total bank's deposit = $400,000

2) Total additional loan that bank can still disperse = bank's deposit - reserve amount - already paid as loan + other bank's asset
    = 400,000 - 80,000 - 310,000 + 50,000 + 110,000
    = $10,000 + $160,000
    = $170,000

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