Question 39 (1 point)
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Assume the Bali Bank has the following balance sheet:
Assets
Reserves: $
Loans: $
Liabilities
Deposits: $10,000
Capital: $2,000
Suppose your grandparents give you $1,000 for all the good work you have done this term at Dal.
Assume this money was previously in a cookie jar hidden in the kitchen at your grandparents'
home. Suppose that Bali Bank's target reserve ratio is 10% and there is no cash drain. After you
deposit this money in your chequing account at Bali Bank, by how much can Bali Bank immediately
expand its loans?
a) $1,000
b) $10,000
c) $900
d) $100