1t2 The reserve requirement. Complete the following information and write appropriate title or answerson each line.AssetsRequired Reserves $60Excess Reserves_$0Securities$80LoansTotal Assets100Required ReservesExcess ReservesSecurities$240LoansTotal Assets632.1 Based on the balance sheet, the initial reserve requirement is 60.2.2 Suppose the fed lowers the reserve requirement by 0.05. How many dollars of excessreserves does this create?$0Balance Sheet for Banking SystemLrabilities2.3 What is the additional lending capacity due to the change in the reserve requirement?2.4 Reconstruct the Balance Sheet for Banking System with changes.New Balance Sheet for Banking SystemDeposits80Deposits100Net WorthTotal Liabilities and Net Worth$240Net WorthTotal Liabilities and Net Worth$0$2402.5 What is the expansion of the Money Supply?2.6 Loans have gone up by._$0

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2 The reserve requirement. Complete the following information and write appropriate title or answer on each line. Assets Required Reserves Excess Reserves Securities Loans Total Assets $60 $0 Required Reserves Excess Reserves Securities Loans Total Assets $80 100 $240 63 $0 80 Balance Sheet for Banking System Hrabilities 100 Deposits 2.1 Based on the balance sheet, the initial reserve requirement is 60. 2.2 Suppose the Fed lowers the reserves does this create?serve requirement by 0.05. How many dollars of excess 2.3 What is the additional lending capacity due to the change in the reserve requirement? 2.4 Reconstruct the Balance Sheet for Banking System with changes. New Balance Sheet for Banking System Deposits Net Worth Total Liabilities and Net Worth Net Worth Total Liabilities and Net Worth $240 2.5 What is the expansion of the Money Supply? 2.6 Loans have gone up by $0 $240 $0 -

2 The reserve requirement. Complete the following information and write appropriate title or answer on each line. Assets Required Reserves Excess Reserves Securities Loans Total Assets $60 $0 Required Reserves Excess Reserves Securities Loans Total Assets $80 100 $240 63 $0 80 Balance Sheet for Banking System Hrabilities 100 Deposits 2.1 Based on the balance sheet, the initial reserve requirement is 60. 2.2 Suppose the Fed lowers the reserves does this create?serve requirement by 0.05. How many dollars of excess 2.3 What is the additional lending capacity due to the change in the reserve requirement? 2.4 Reconstruct the Balance Sheet for Banking System with changes. New Balance Sheet for Banking System Deposits Net Worth Total Liabilities and Net Worth Net Worth Total Liabilities and Net Worth $240 2.5 What is the expansion of the Money Supply? 2.6 Loans have gone up by $0 $240 $0 -

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Initial deposit ($100) The Money Multiplier Process Loan Loan $ University Bank Excess reserves: $25 Required reserves: $75 Deposit Bank #2 Deposit Excess reserves: $6.25 Required reserves: $18.75 Instructions: Round your responses to two decimal places. a. What volume of loans can the banking system in the figure support? Bank #3 Loan Deposit Excess reserves: $1.56 Required reserves: $4.69 Bank #4 etc. Excess reserves: $0.39 Required reserves: $1.17 b. If the reserve requirement were 15 percent rather than 75 percent, what would the system's lending capacity be?
12. A bank has reserves of $40, loans of $110, deposits of $90, and owners’ equity of $60. Which of the following represents the bank’s total assets? $180 $110 $130 $150
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51)Consider the following for National City Bank. If the required reserve ratio is 4 percent, the excess reserves of National City Bank is Assets Liabilities Reserves $10,000 Deposits $100,000 Loans $90,000 Select one: a. $10,000 b. $6,000 c. $3,000 d. $4,000
The table shows the commercial banks' balance sheet (aggregated over all the banks). The commercial banks' desired reserve ratio on all deposits is 10 percent and there is no currency drain. Calculate the bank's excess reserves. >>> Answer to 2 decimal places. Assets Reserves at the Fed Cash in vault Securities Loans The banks' excess reserves are $☐ million. Liabilities (millions of dollars) 2535 20 Checkable deposits 15 Savings deposits 40 95
The table below shows information for United Bank. Deposits Reserves Reserve Requirement $300 million $33 million 10% Which of the following statements is true concerning United Bank in the federal funds market? Multiple Choice C O United Bank will lend $33 million reserves in the federal funds market. O United Bank will borrow $30 million reserves in the federal funds market. United Bank will lend $3 million reserves in the federal funds market. United Bank will borrow $3 million reserves in the federal funds market. @ a $ % Λ &
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4. Working through an open-market operation Assume that the following balance sheet portrays the state of the banking system. The banks currently have no excess reserves. Assets (Billions of Dollars) Total reserves 5 Checkable deposits 25 20 50 Loans Securities Total O What is the required reserve ratio? 40% 25% Liabilities and Net Worth 5% 10% Total 50 50
1. The amount of funds that a bank chooses to keep on hand beyond what it is required to is called: excess reserves. excess deposits. federal funds. extra holdings. 2. Suppose Bank Y currently has $300M in demand deposits and $45M in reserves. Bank Xs reserve ratio is 10% 12% 15% None of the above
Assets Liabilities Reserve 200 Deposits 1000 Loan 800 Total 1000 Total 1000 1. Assuming the bank does not hold any excess reserve, what is the required reserve ratio? 2. What is The value of deposit expansion multiplier ? Note : show your calculations
Economi 15. The federal deposit insurance corporation (FDIC) insures individual bank accounts up to $250,000 per account. Which of the following statements regarding FDIC insurance is true? FDIC insurance a. does not eliminate the need for reserve requirements because bank runs can't be eliminated in a fractional reserve banking system b. has prevented bank runs because the FDIC pays depositors interest at the discount rate on their accounts c. eliminates the need for reserve requirements because banks are not liable for any depositor losses d. works in coordination with reserve requirements to ensure depositor confidence, preventing bank runs.