Answer:
The maximum deposit outflow it can sustain without altering its balance sheet is $120,000.
Explanation:
Total Check-able Deposit is $200,000 and the required reserve ratio is 20% which is $40,000.
Required Reserve amount = $200,000 x 20% = $40,000
Reserve amount = $80,000
This bank has excess of $40,000 reserves from required reserve ratio.
Excess Reserve = $80,000 - $40,000 = $40,000
As we know the bank has been reporting their reserves on the Balance sheet so the amount that will be reported on the balance sheet is $80,000. So the limit to sustain without altering its balance sheet is $80,000. Deposits below this amount will result to alter the balance sheet.
Maximum Deposit outflow = Current Deposit - current reserve amount
Maximum Deposit outflow = $200,000 - $80,000
Maximum Deposit outflow = $120,000
