FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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10
The table below is the combined balance sheet for all the banks in a banking system. Each bank has a target reserve ratio of 5%.
Liabilities Equity
Demand deposits
Shareholders' equity
Assets
Reserves
Loans
Securities
Fixed assets
Total
$200
1,800
1,300
300
$3,600
$
(1)
$
(2)
Total
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10 of 14
a. Fill in the blanks in columns (1) reflecting the complete effect of all excess reserves being loaned out.
b. The maximum possible increase in the money supply is $
c. Returning to the original balance sheet, if the target reserve ratio changes to 10%, the quantity of loans the system be forced to call
in will be $
Write in the figures in columns (2) that show this process completed.
SAMSUNG
$3,000
600
$3,600
Net>
Next
(1)
$
(2)
expand button
Transcribed Image Text:The table below is the combined balance sheet for all the banks in a banking system. Each bank has a target reserve ratio of 5%. Liabilities Equity Demand deposits Shareholders' equity Assets Reserves Loans Securities Fixed assets Total $200 1,800 1,300 300 $3,600 $ (1) $ (2) Total Prev Search 10 of 14 a. Fill in the blanks in columns (1) reflecting the complete effect of all excess reserves being loaned out. b. The maximum possible increase in the money supply is $ c. Returning to the original balance sheet, if the target reserve ratio changes to 10%, the quantity of loans the system be forced to call in will be $ Write in the figures in columns (2) that show this process completed. SAMSUNG $3,000 600 $3,600 Net> Next (1) $ (2)
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