Question
Balance sheet of the Bank of your class Assets Liabilities Cash $ 10,000 Loans $ 140,000 Deposits $ 90,000 Capital $ 60,000 Total $ 150,000
Balance sheet of the Bank of your class
Assets | Liabilities |
Cash $ 10,000 Loans $ 140,000 | Deposits $ 90,000 Capital $ 60,000 |
Total $ 150,000 | Total $ 150,000 |
The required reserve ratio on all deposits is 10%
a. What, if any, are this bank's excess reserves?
b. How much new amount of loan will this bank be able to create because of the excess reserves?
c. How much new amount of loan will the entire banking system be able to create because of the excess reserves?
d. Answer part a,b and c if the required reserve ratio is changed to 6%.
e. How much new amount of loan will this bank be able to create if some one deposited $4,000 in cash when the RRR is 6%?
Step by Step Solution
3.40 Rating (169 Votes )
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get StartedRecommended Textbook for
Economics of Money, Banking and Financial Markets
Authors: Frederic S. Mishkin
9th Edition
978-0321607751, 9780321599797, 321607759, 0321599799, 978-0321598905
Students also viewed these Accounting questions
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
View Answer in SolutionInn App