1.

Suppose the simplified consolidated balance sheet shown below is for the entire commercial banking system and that all figures are in billions of dollars. The reserve ratio is 10 percent. Assets 1 (a) (b) Liabilities and net worth 1' (a) (b) Reserves 60 60 60 Checkable deposits $ 200 Securities 40 40 40 Loans 100Instructions: Enter your answers as a whole number. a. What is the amount of excess reserves in this commercial banking system? billion What is the maximum amount the banking system might lend? billion Show in columns 1(a) and 1'(a) how the consolidated balance sheet would look after this amount has been lent. Enter these new values in the gray shaded cells of the given table. What is the size of the monetary multiplier?b. Using the original figures, answer the questions in part a assuming the reserve ratio is 5 percent. What is the amount of excess reserves in this commercial banking system? $ billion What is the maximum amount the banking system might lend? $ billion Show in columns 1(b) and 1'(b) how the consolidated balance sheet would look after this amount has been lent. Enter these new values in the gray shaded cells of the given table. What is the monetary multiplier?What is the resulting difference in the amount that the commercial banking system can lend when the required reserve ratio is 5 percent rather than 10 percent? It can lend $ billion (Click to select)Suppose that in a given month $59 million is deposited into the banking system while $61 million is withdrawn. Also suppose that the Fed has set the reserve requirement at 8 percent and that banks have no excess reserves atthe beginning of the month. What is the maximum amount of new checkable-deposit money that can be created (or removed) by the banking system as a result ofthese deposits and withdrawals? Instructions: Enter your answer as a whole number. Enter a positive number to show an increase and a negative number {-) to show a decrease. $ million