Suppose $200 comma 000 is deposited at a bank. The required reserve ratio is 20 percent, and the bank chooses not to hold any excess reserves but makes loans instead. What are the bank's total loans?

The bank's total loans amount is $160,000.

Explanation: The bank got a total deposit of $200,000 from its customers. The reserve ratio was given as 20%. The is the cash reserve amount that should be domiciled with Fed. So 20% of $200,000, which is the total deposit is $40,000. This means an amount of $40,000 is the reserved cash. Since the bank has chosen not to keep any excess reserves, it means the bank would be availing a total loans amount of $160,000 (%200,000 - $40,000) to its customers.

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