Question

If Bank A has excess reserves of $1 million and all other banks in the system do not have any excess reserves, then the amount of additional loans that can be made by the banking system will be_________.

Answer 1

Answer:

$1 million 

Explanation:

Excess reserves is what is left after banks pay their required reserves. It is out of the excess reserves that banks give out loans.

Excess reserves = Deposit - Required reserve.

If a bank has $1 million in excess reserves, there's is at most $1 million available to be given out as loans.

I hope my answer helps you.