After people deposit the $50,000 that they receive from the central bank in accounts at First City Bank, by ho

Question

Consider a small city-state with a central bank, which conducts monetary policy, and just one commercial bank, First City Bank, where customers can open demand deposit accounts. The table below shows the T-account for First City Bank. People have $500,000 in demand deposits at First City and $100,000 worth of city-state bonds. The bonds are not part of the money supply. Use this information to answer the following questions

reserves=100,000

loans= 400,000

Deposits=500,000

After people deposit the $50,000 that they receive from the central bank in accounts at First City Bank, by how much can the bank increase its loans and still meet the reserve requirement?

I got 40,000. Is that right?

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