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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10. If the reserve ratio is 20% and the banking system has excess reserves of $50, the maximum amount of new deposits that can be created through lending is $ Type your answer here
7. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 10%. Hubert, a client of First Main Street Bank, deposits $500,000 into his checking account at First Main Street Bank. Complete the following table to reflect any changes in First Main Street Bank's T-account (before the bank makes any new loans). Assets Liabilities Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 10%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves Change in Required Reserves (Dollars) (Dollars) (Dollars) 500,000 Now, suppose First Main Street Bank loans out all of its new excess reserves to Eileen, who immediately uses the funds to write a check to Clancy. Clancy…
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a). Calculate excess reserves when required reserve ratio on demand deposit is 14% and required reserve ratio on time deposit is 3%. b). suppose that required reserve ratios are changed to 16% on demand deposits and 0% on time deposits. Calculate excess reserves c. suppose bank sells 3 million in securities on the open market. Calculate the change in the bank's excess reserves when the required reserve ratio on demand deposits is 14%
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Why does the Federal Reserve require commercial banks to have reserves? Explain why reserves are an asset to commercial banks but a liability to the Federal Reserve Banks. What are excess reserves? How do you calculate the amount of excess reserve held by a bank? What is significance of excess reserves?
29. The required reserve ratio for the bank in Table A is A) 18 percent. B) 10 percent. C) 12 percent. D) 16 percent.
-The Golden State Bank has total cash reserves of $110,000, deposits of $200,000, and loans of $90,000. The reserve requirement is 5 percent. This bank can make additional loans up to the amount of: $10,000 $5,500 $100,000 $190,000
A bank has a 5 percent reserve requirement, $4,000 in deposits, and has loaned out all it can given the reserve requirement. Select one: a.None of them. b.lt has $1,000 in reserves and $3,000 in loans. c.lt has $20 in reserves and $4,980 in loans. d.It has $200 in reserves and $4,800 in loans.
H3.