Question
Below is the simplified balance sheet of Gorgonzolan commercial banks at some point in time. Assets Currency (= reserves) 400,000 Loans 200,000 Liabilities Deposits 600,000
Below is the simplified balance sheet of Gorgonzolan commercial banks at some point in time.
Assets
Currency (= reserves) 400,000
Loans 200,000
Liabilities
Deposits 600,000
Assume that the Gorgonzolan commercial banks desire to hold reserves of 40 percent of deposits and that the public holds no currency long term.
Instructions: Enter your responses as whole numbers.
a. Given the data in the balance sheet, the Gorgonzolan commercial banks want to hold in reserves.
b. The Gorgonzolan commercial banks currently have in extra reserves that they would like to lend out.
c. Assuming that no additional reserves enter the Gorgonzolan banking system, the final values of bank reserves, loans, and deposits are:
Final consolidated balance sheet
Assets
Currency Final value of bank reserves=
Loans=
Liabilities
Deposits=
d. The final value of the money supply is: ____ guilders.
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