Single Bank Balance Sheet Calculations and Transactions Consider the balance sheet below for Gold Rush Bank, NA. (a/k/a GRB) Assets Reserves $65,000.00 Loans $22,000.00 Securities $23,000.00 Cash $25,000.00 Liabilities Demand Deposits = $110,000.00 Loans from FED = $25,000.00 Calculations: use only integers or fully reduced fractions for multipliers. All currency values stated with S on left, 2 decimal places. If the required reserve ratio = 0.235 or and the portion of M1 kept as currency is 0.565 or then answer the following: 200 113 200 a. How much does GRB have in required reserves (RR)? How much money does GRB have in excess reserves (ER)? b. Calculate the potential money multiplier (mp). How much potential new money (Mp) can be created by GRB if they loan out all of their excess reserves? (Calculate this to the nearest penny) c. Calculate the ACTUAL Money Multiplier (ma) and ACTUAL Money Created (M) Cumulated Balance Sheet Sample Problem Consider the Cumulated Balance Sheets for the Federal Reserve System and the Commercial Banking System. All figures are in billions of US dollars. Federal Reserve System Commercial Banking System Assets Liabilities Securities Reserves of CBS Assets Reserves $85 billion Liabilities = $135 billion Loans to CBS = $75 billion = $85 billion Treasury Deposits = $45 billion Currency in Circulation Loans $58 billion Demand Deposits = $160 billion Loans from the FED = $75 billion = $80 billion Securities = $45 billion Currency |= $47 billion Show the effect of the following transactions on balance sheets of the FED and the Commercial Banking System. Show how each transaction causes the money supply (M1) to change. Do not cumulate your answers. T1. Because the FED lowered ia, Commercial Banks borrow $8 Billion from the Fed. T2. The FED sells $5 billion in securities to the Public, who pay with personal & business checks. T3. Because the FED raised if & id. Customers of Commercial Banks pay off $15 billion in personal and commercial loans. T4. The FED buys $10 billion in securities from Commercial Banks. T5. Commercial banks order $9 billion in new currency from the FED.