Question
Answer the next question based on the following consolidated balance sheet for the chartered banking system.Assume the desired reserve ratio is 30%.All figures are in
Answer the next question based on the following consolidated balance sheet for the chartered banking system.Assume the desired reserve ratio is 30%.All figures are in millions of dollars.Show the calculations, otherwise marks will not be given
AssetsLiabilities
Reserves$200DemandDeposits$600
Securities500Capital Stock700
Loans100
Property500
(a)What is the amount of excess reserves in this chartered banking system?(3 marks)
(b)What is the maximum amount that the money supply can be expanded?(2 marks)
(c ) If the reserve ratio fell to 25 percent, what is now the maximum amount that themoney supply can beexpanded?(3 marks)
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