Question

\[ \begin{array}{|c|c|c|c|} \hline \textbf{Round} & \textbf{Deposits} & \textbf{Loans (80\%)} & \textbf{Reserve Ratio (20\%)} \\ \hline I & 5000 & 4000 & \ldots(i)\ldots \\ \hline II & 4000 & \ldots(ii)\ldots & 800 \\ \hline \ldots & \ldots & \ldots & \ldots \\ \hline Total & \ldots(iii)\ldots & \ldots(iv)\ldots & 5000 \\ \hline \end{array} \]

• A. 1000, 800, 20000, 25000
• B. 5000, 3200, 25000, 20000
• C. 1000, 3200, 25000, 20000
• D. 1000, 800, 20000, 25000

Hint:

For deposit and loan-related problems, remember the relationship: Total Loans = 80\% of Total Deposits, and Reserve Ratio = 20\% of Deposits.

Answer 1

The Correct Option is C

Reserve ratio in Round I (\(i\)) = 20% of 5000 = 1000. Loans in Round II (\(ii\)) = 80% of 4000 = 3200. Total deposits (\(iii\)) = Initial deposit + subsequent deposits = 25000. Total loans (\(iv\)) = 80% of total deposits = 20000.