Question
Assets Liabilities and Net Worth (1) (2) (1) (2) Reserves 55 Checkable deposits 225 Securities 37 Loans 135 a. Calculate the amount of required reserve
| Assets | Liabilities and Net Worth | ||||
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| (1) | (2) |
| (1) | (2) |
| Reserves | 55 |
| Checkable deposits | 225 |
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| Securities | 37 |
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| Loans | 135 |
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a. Calculate the amount of required reserve in this banking system.How much would excess reserves be in the commercial banking system?
b. Calculate the monetary multiplier. How much would the banking system be able to lend outfully?
c. If the commercial banking system lends out up to its maximum ability, how would the consolidated balance sheet change? Write the new amount on the empty spaces in columns 1 and 2 after the loan is given out.
d. Suppose that the central bank revised the reserve ratio from the present 20% to 25%. Explain the effects of this on the lending ability of the commercial banking system.
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