Question
I need help with assistance with PART 2 of this Question Below is the Balance Sheet for the Bank of Upland as of October 1,
I need help with assistance with PART 2 of this Question
Below is the Balance Sheet for the Bank of Upland as of October 1, 2017. The required reserve ratio is 20%. Using this information and the Balance Sheet below answer the following questions.
Bank of Upland | |
Assets | Liabilities |
$120 million Vault Cash | $800 million Demand Deposits |
$180 million Treasury Bonds | |
$50 million Car Loans | |
$20 million Business Loans | |
$30 million Credit Card Loans | |
$240 million on Deposit with the Fed | |
$160 million Mortgages | |
$800 million Total Assets | |$800 million Total Liabilities |
(a) Calculate the Bank of Uplands Total Reserves as of October 1, 2017 (please show/explain how you got your answer). - The Bank of Upland Total Reserves as of October 1, 2017, is $360 million. b) Calculate the Bank of Uplands Required Reserves as of October 1, 2017 (please show/explain how you got your answer). - Bank of Upland required reserve as of October 1, 2017, is $160 Million. c) Calculate the Bank of Uplands Excess Reserves as of October 1, 2017 (please show/explain how you got your answer). - As of October 1, 2017, Bank of Upland Excess Reserves is $200 million. d) Determine the amount of Bank of Uplands Total Reserves which can legally be loaned out as of October 1, 2017 (please show/explain how you got your answer). - The $200 million in excess reserve of Bank of Upland can be legally loaned out.
e) Calculate the Bank of Uplands Money Creating Potential throughout the entire Banking System as of October 1, 2017 (please show/explain how you got your answer). - The Money Making Potential is $4 Billion.
PART 2 Start with the same Balance Sheet and required reserve ratio found in Part 1 above, and using the fact that the Federal Reserve had just bought $50 million worth of Treasury Bonds (T-bonds) from the Bank of Upland at the end of business on October 1, 2017 (no other transaction occurred at the Bank of Upland on October 1, 2017), answer the following questions. a) Fill in the Bank of Uplands Balance Sheet numbers as of the start of business on October 2, 2017 for the categories found below. Start with the numbers in Part 1 above and incorporate the fact that the Federal Reserve (using Open Market Operations) had just bought $50 million worth of Treasury Bonds (T-bonds) from the Bank of Upland. Using a Word Table might help.
Bank of Upland | |
Assets | Liabilities |
Vault Cash | Demand Deposits |
Treasury Bonds | |
Car Loans | |
Business Loans | |
Credit Card Loans | |
on Deposit with the Fed | |
Mortgages | |
Total Assets | Total Liabilities |
b) Calculate the Bank of Uplands Total Reserves as of October 2, 2017 (please show/explain how you got your answer). c) Calculate the Bank of Uplands Required Reserves as of October 2, 2017 (please show/explain how you got your answer). d) Calculate the Bank of Uplands Excess Reserves as of October 2, 2017 (please show/explain how you got your answer).
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