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Suppose the Continental Bank has the following simplified balance sheet. The reserve ratio is 10%.
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Assets Liabilities and net worth
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Reserves $22000 Demand deposits $100000
Securities 38000
loans 40000
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a. This bank's required reserves is _________ . This bank's excess reserve is ___________.
What is the simple deposit money multiplier? _________
b. The maximum amount of new loans, which this bank can make, is ____________________
What is the maximum change this new loan can create in the money supply? ____________
c. If the bank had lend the whole excess reserve to a customer, and this customer had cleared his
check at the Continental bank. What do the following equal?
Reserves = ____________________ Loans = _______________________
d. Suppose now the Fed buys $10,000 worth of securities from Continental Bank.
Actual reserves = $ _______________ Excess reserves = $ _____________
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Assets Liabilities and net worth
-------------------------------------------------------------------
Reserves $22000 Demand deposits $100000
Securities 38000
loans 40000
-------------------------------------------------------------------
a. This bank's required reserves is _________ . This bank's excess reserve is ___________.
What is the simple deposit money multiplier? _________
b. The maximum amount of new loans, which this bank can make, is ____________________
What is the maximum change this new loan can create in the money supply? ____________
c. If the bank had lend the whole excess reserve to a customer, and this customer had cleared his
check at the Continental bank. What do the following equal?
Reserves = ____________________ Loans = _______________________
d. Suppose now the Fed buys $10,000 worth of securities from Continental Bank.
Actual reserves = $ _______________ Excess reserves = $ _____________