Mj 8. Working through a change in the reserve requirementAssume that the following table portrays the balance sheet of First Southern bank.AssetsVault CashDeposits at FedLoansTotal$150,000$250,000$500,000$900,000Liabilities and Net WorthFirst Southern's bank reserves are equal to $checking deposits, First Southern' would maintainreserves over and above the desired amount.Deposits $900,000The increase in the money supply will beTotalI$900,000If First Southern uses the reserves above the desired level to extend additional loans, the money supply would increase by$If First Southern bank wanted to maintain 0.20 of its assets as reserves againstas reserves. Therefore, it would have $as additionalIf First Southern wanted to maintain 0.10 of its assets as reserves against checking deposits, First Southern' would maintain $as reserves, additional reserves would be $and the increase in the money supply would be $if First Southern chooses a desired reserve ratio of 0.10.

Bank Assets: These are the resources owned by a bank that have economic value and can generate…

. Working through a change in the reserve requirement ssume that the following table portrays the balance sheet of First Southern bank. Assets Vault Cash Deposits at Fed Loans Total $150,000 $250,000 $500,000 $900,000 Liabilities and Net Worth Deposits $900,000 Total $900,000

. Working through a change in the reserve requirement ssume that the following table portrays the balance sheet of First Southern bank. Assets Vault Cash Deposits at Fed Loans Total $150,000 $250,000 $500,000 $900,000 Liabilities and Net Worth Deposits $900,000 Total $900,000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

8. Working through a change in the reserve requirement
Assume that the following table portrays the balance sheet of First Southern bank.
Assets
Vault Cash
Deposits at Fed
Loans
Total
$150,000
$250,000
$500,000
$900,000
Liabilities and Net Worth
First Southern's bank reserves are equal to $
checking deposits, First Southern' would maintain
reserves over and above the desired amount.
Deposits $900,000
The increase in the money supply will be
Total
I
$900,000
If First Southern uses the reserves above the desired level to extend additional loans, the money supply would increase by
$
If First Southern bank wanted to maintain 0.20 of its assets as reserves against
as reserves. Therefore, it would have $
as additional
If First Southern wanted to maintain 0.10 of its assets as reserves against checking deposits, First Southern' would maintain $
as reserves, additional reserves would be $
and the increase in the money supply would be $
if First Southern chooses a desired reserve ratio of 0.10.

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