Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The
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- Assume that the required reserve ratio is 7.00%, that banks do not keep excess reserves, and that all the money loaned out from Bank Uno is deposited into Bank Duo (whose loans go to other banks not shown here). Bank Uno has $2,167 in reserves and $2,167 in deposits. Once the lending and depositing process is complete, what will Bank Uno have in reserves, loans, and deposits?arrow_forwardTable 1 shows the financial position of Bank Uno once $4921.00 has been deposited. Assume that the required reserve ratio is 9.00%, that banks do not keep excess reserves, and that all the money loaned out from Bank Uno is deposited into Bank Duo (whose loans go to other banks not shown here). Once the lending and depositing process is complete, what will the accounts look like in Tables 2 and 3? Specify all answers to two decimal places. Table 1. Bank Uno's Initial T-Account Assets Reserves: $4921.00 Table 2. Bank Uno's T-Account After Loans Assets Reserves: ? Liabilities Deposits: $4921.00 Liabilities Deposits: ? Loans: ? Table 3. Bank Duo's T-Account After Deposits and Loans Assets Reserves: ? Loans: ? What are Bank Uno's deposits in Table 2? $ Liabilities Deposits: ?arrow_forwardUse the information presented in Northeastern Mutual Bank's balance sheet to answer the following questions. Bank's Balance Sheet Assets Liabilities and Owners' Equity Reserves $175 Deposits $1,400 Loans $700 Debt $225 Securities $875 Capital (owners' equity) $125 Suppose the owners of the bank borrow $100 to supplement their existing reserves. This would increase the reserves account and the account. This would also bring the leverage ratio from its initial value of to a new value of Which of the following do bankers take into account when determining how to allocate their assets? Check al that apply. The reserve requirement The size of the maonetary base O The total value of liabilitiesarrow_forward
- What is the maximum impact on the money supply from the bond liquidation in the previous problem(Use positive or negative to show growth or contraction)? Required Reserve Ratio=20% Assets Liabilities Total Reserves=$50 Demand Deposits=$100 Loans=$20 Bonds=$30arrow_forwardYour bank has the following balance sheet: Assets Liabilites Reserves $50 million Checkable Deposits $200 million Securites $50 million Bank Capital $50 million Loans $150 million If the required reserve ratio is 10%, what possible actions can the bank manager take if there is an unexpected deposit outflow of $50 million?arrow_forwardYou are given the following balance sheet of the Summer Bank (21) Balance sheet of the Winter bank Assets Liabilities Cash $ 8,000 Deposited with the Fed $ 5,000 Loans $ 117,000 Deposits $ 80,000 Capital $ 50,000 Total $ 130,000 Total $ 130,000 The required reserve ratio (RRR) on all deposits is 5% What, if any, are this bank's excess reserves? How much new amount of loan will this bank be able to create because of the excess reserves? How much new amount of loan the entire banking system be able to create because of the excess reserves? What would be the excess reserves of this bank after the RRR is changed to 4%? How much new amount of loan will this bank be able to create with the RRR of 4%? How much new amount of loan the entire banking system be able to create because of the excess reserves? What happened to the money supply after the…arrow_forward
- Demand deposits at the Sixth National Bank are $200,000 and the reserve requirement is 10%. Total cash reserves equal $50,000. Required reserves equal: $10,000 $20,000 $30,000 $40,000 $50,000arrow_forwardAssuming that the cash held by the public drops to $5,000,000 with and equal amount becoming excess reserves and the required reserves ratio drops to 12 percentarrow_forwardSuppose that Ava withdraws $200 from her savings account at Second Bank. The reserve requirement facing Second Bank Is 18%. Assume the bank does not wish to hold any excess reserves of new deposits. Use this information to complete the balance sheet below to show how Second Bank's assets and liabilities change when Ava withdraws the $200 from the bank. Instructions: Enter your answer as a whole number. If you are entering a negative number include a minus sign. A Simple Bank Balance Sheet Assets Change in Reserves: $ Change in Loans: $ Liabilities Change in Deposits: $arrow_forward
- If Jason deposits $2,500 into his bank and the reserve ratio is 11%, what would be the amount of excess reserves that are immediately created? $30.25 $244.75 $275 $1,980.25 $2,225arrow_forwardUse the information given in North Central National Bank's balance sheet to answer the following questions. Bank's Balance Sheet Assets Liabilities and Owners' Equity Reserves $200 Deposits $1,600 Loans $800 Debt $250 Securities $1,000 Capital (owners' equity) $150 Suppose a new customer adds $100 to his account at North Central National Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and account. the This would also bring the leverage ratio from its initial value of to a new value of Which of the following do bankers consider when deciding how to allocate their assets? Check all that apply. The size of the monetary base The return on each asset The total value of liabilitiesarrow_forwardConsider the following T-account for National City Bank: Assets Reserves $10,000 Loans $90,000 A) $10,000 If the required reserve ratio is lowered to 8 percent, how much can National City loan out? B) $8,000 C) $2,000 Liabilities D) $0 Deposits $100,000arrow_forward
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