#1 A bank (with no excess reserve) receives $75 million from the Federal Reserve. Use the model of multiple deposit creation with an assumption that only 3 banks (including the one which gets funds from the Federal Reserve) will make full loans up to their excess reserves. The fourth bank decides to hold on to its excess reserve and does not make any loans. If the reserve requirement is 20%, calculate the maximum credit creation.

answer choice"

$164 million

$221 million

$130 million

$146 million

#2

Sales (all credit): $5,500,000; Cost of Goods Sold: 75% of Sales; Accounts receivable: $420,000; Inventory: $475,000; Accounts payable: $115,000 What is the expected working capital financing requirement based on the working capital cycle? Round up to next integer for Working Capital Cycle. Use 1 year = 365 days

answer choice:

		$756,164
		$736,438
		$920,548
		$678,082

#3

A bank has the following balance sheet: Reserves $1250 million; Loans $1525 million; Deposits $2200 million and capital $575 million. The bank suffers a deposit outflow of $1100 million. How much additional funds does the bank need to acquire to meet reserve requirements if the required reserve ratio is 20%?

answer choice:

		Zero, since it meets the reserve requirement
		$70 million
		$20 million
		$30 million