A Curriculum Module for AP Macro Activity Sets Activity One Given the following situations, answer the questions. Assume that all banks have proper required reserves. rr = required reserves er = excess reserves dd = demand deposit (checking account) 1. Assets Liabilities $5 IT $10 dd $5 loans a. What is the reserve requirement ratio? 30 % 2. Assets Liabilities $5 IT $20 dd $5 er $10 loans a. What is the reserve requirement ratio? 25 % b. Why is this bank less profitable than it could be? c. Why would this bank be considered more secure than required? 3. Assets Liabilities $8 II $40 dd $32 bonds a. What is the reserve requirement ratio? 20 % b. The $40 of deposits enables the banking system to increase the total money supply by how much? c. A withdrawal of $5 in cash or check from this bank would do what to the amount that should by Federal Reserve requirements be in the reserves? 14