Assuming an economy have only two commercial banks in it banking system, Classic Bank and Prudent Bank The following shows the balance sheet of the two banks as at 2019 Classic Bank Balance sheet as at December, 2019 GHSm GHSm Liabilities Equity Reserves 1,000 Deposits 3,000 Securities 2,000 Equity 7,000 Loans Advances 1,000 Property, Plant and Equipment 6,000 10,000 10,000 Prudent Bank Balance sheet as at December, 2019 GHSm GHSm Assets Liabilities Equity Reserves 600 Deposits 2,500 Securities 1,500 Equity 7,000 Loans Advances 800 Property, Plant and Equipment 4,000 6,900 6,900 Assume a required reserve ratio of 10 What is the amount of excess reserves in this commercial banking system What is the maximum amount that the money supply can be expanded What would be the effect of a fall in reserve ratio to 5 , on the maximum amount that the money supply can be expanded Determine the stock of broad money supply assuming the non bank public holds notes and coins of GHS4,000million ) Suppose Classic bank makes additional loans of GHS300 million to its customers and some of these customers use GHS150 million to make payment to other depositors of the same bank and GHS150 million to make payments to clients of Prudent bank (i) Draw up the new balance sheets of each bank Classic Bank Balance sheet as at December, 2019 GHSm GHSm Assets Liabilities Equity Reserves Deposits Securities Equity Loans Advances Property, Plant and Equipment Prudent Bank Balance sheet as at December, 2019 GHSm GHSm Assets Liabilities Equity Reserves Deposits Securities Equity Loans Advances Property, Plant and Equipment (ii) Determine the stock of broad money holding the assumption made in part (c) (iii) What is the multiplier effect of money supply

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Assuming an economy have only two commercial banks in it banking system, Classic Bank and Prudent Bank. The following shows the balance sheet of the

Assuming an economy have only two commercial banks in it banking system, Classic Bank and Prudent Bank. The following shows the balance sheet of the two banks as at 2019.

Classic Bank

Balance sheet as at December, 2019

	GHSm		GHSm
		Liabilities & Equity :
Reserves	1,000	Deposits	3,000
Securities	2,000	Equity	7,000
Loans & Advances	1,000
Property, Plant and Equipment	6,000
	10,000		10,000

Prudent Bank

Balance sheet as at December, 2019

	GHSm		GHSm
Assets:		Liabilities & Equity:
Reserves	600	Deposits	2,500
Securities	1,500	Equity	7,000
Loans & Advances	800
Property, Plant and Equipment	4,000
	6,900		6,900

Assume a required reserve ratio of 10%.

What is the amount of excess reserves in this commercial banking system?
What is the maximum amount that the money supply can be expanded? What would be the effect of a fall in reserve ratio to 5%, on the maximum amount that the money supply can be expanded?
Determine the stock of broad money supply assuming the non-bank public holds notes and coins of GHS4,000million.

) Suppose Classic bank makes additional loans of GHS300 million to its customers and some of these customers use GHS150 million to make payment to other depositors of the same bank and GHS150 million to make payments to clients of Prudent bank.