Question
BOX 2: Take the following information as true Balance Sheet for First National Bank: Assets Liabilities Reserves $100,000 Deposits $500,000 Loans $400,000 7. 1. Refer
BOX 2: Take the following information as true Balance Sheet for First National Bank: Assets Liabilities Reserves $100,000 Deposits $500,000 Loans $400,000 7.
1. Refer to Box 2. The reserve ratio is 5%. First National Bank has excess reserves equal to: (a) $0 (b) $25,000 (c) $50,000 (d) $75,000 (e) $100,000
2. Refer to Box 2. If First National Bank lends out its excess reserves, all banks hold no excess reserves and the non-banking sector holds all of its money in deposits, then the money supply will eventually expand by: (a) $0 (b) $50,000 (c) $75,000 (d) $950,000 (e) $1,000,000 (f) $1,425,000 (g) $1,500,000
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