Suppose again that checkable deposits started off as $200,000 in First Main Street Bank, the required reserve ratio (r) is 15%, with and there are no excess reserves and no cash leakage. Suppose the Fed buys $2,500 worth of government securities from First Main Street Bank. Complete the following table to reflect the Fed's purchase on the balance sheet for First Main Street Bank. Assets Reserves Loans Liabilities Checkable Deposits Does First Main Street Bank have any excess reserves now? No; the bank has zero excess reserves. Yes; the bank has $25,500 in excess reserves. Yes; the bank has $375 in excess reserves. Yes; the bank has $2,500 in excess reserves. $200,000

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Chapter1: Making Economics Decisions
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Suppose again that checkable deposits started off as $200,000 in First Main Street Bank, the required reserve ratio (r) is 15%, with and there are no
excess reserves and no cash leakage.
Suppose the Fed buys $2,500 worth of government securities from First Main Street Bank.
Complete the following table to reflect the Fed's purchase on the balance sheet for First Main Street Bank.
Reserves
Loans
Assets
TOTAL SCORP
Liabilities
Checkable Deposits
Does First Main Street Bank have any excess reserves now?
No; the bank has zero excess reserves.
Yes; the bank has $25,500 in excess reserves.
Yes; the bank has $375 in excess reserves.
Yes; the bank has $2,500 in excess reserves.
$200,000
Transcribed Image Text:Suppose again that checkable deposits started off as $200,000 in First Main Street Bank, the required reserve ratio (r) is 15%, with and there are no excess reserves and no cash leakage. Suppose the Fed buys $2,500 worth of government securities from First Main Street Bank. Complete the following table to reflect the Fed's purchase on the balance sheet for First Main Street Bank. Reserves Loans Assets TOTAL SCORP Liabilities Checkable Deposits Does First Main Street Bank have any excess reserves now? No; the bank has zero excess reserves. Yes; the bank has $25,500 in excess reserves. Yes; the bank has $375 in excess reserves. Yes; the bank has $2,500 in excess reserves. $200,000
Suppose that the economy's entire money supply equals checkable deposits in the amount of $200,000 held in First Main Street Bank. The required
reserve ratio (r) is 15%, with no excess reserves and no cash leakage.
Complete the following table to reflect the relevant part of the balance sheet for First Main Street Bank (before the bank makes any new loans).
Liabilities
Reserves
Loans
Assets
$30,000
$170,000 V
Checkable Deposits
$200,000
Transcribed Image Text:Suppose that the economy's entire money supply equals checkable deposits in the amount of $200,000 held in First Main Street Bank. The required reserve ratio (r) is 15%, with no excess reserves and no cash leakage. Complete the following table to reflect the relevant part of the balance sheet for First Main Street Bank (before the bank makes any new loans). Liabilities Reserves Loans Assets $30,000 $170,000 V Checkable Deposits $200,000
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