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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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abiolataiwo2015

The maximum deposit outflow it can sustain without altering its balance sheet is: $50,000.

Maximum deposit outflow

Let x represent the maximum deposit outflow

80,000-x

(200,000-x)×20%=80,000-x

40,000-.20x=80,000-x

x-.20x=80,000-40,000

0.80x=40,000

Divide both side by 0.80x

x=40,000/0.80

x=$50,000

Inconclusion the maximum deposit outflow it can sustain without altering its balance sheet is: $50,000.

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