MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Question
Chapter 15, Problem 7SQP
To determine
Impact of withdrawing an amount from bank on its balance sheet and its lending capacity.
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Students have asked these similar questions
How to figure out the banks' excess reserves.
How much new amount of loan will this bank be able to create because of the excess reserves?
Your 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?
Chapter 15 Solutions
MACROECONOMICS FOR TODAY
Ch. 15.3 - Prob. 1YTECh. 15 - Prob. 1SQPCh. 15 - Prob. 2SQPCh. 15 - Prob. 3SQPCh. 15 - Prob. 4SQPCh. 15 - Prob. 5SQPCh. 15 - Prob. 6SQPCh. 15 - Prob. 7SQPCh. 15 - Prob. 8SQPCh. 15 - Prob. 9SQP
Ch. 15 - Prob. 10SQPCh. 15 - Prob. 11SQPCh. 15 - Prob. 1SQCh. 15 - Prob. 2SQCh. 15 - Prob. 3SQCh. 15 - Prob. 4SQCh. 15 - Prob. 5SQCh. 15 - Prob. 6SQCh. 15 - Prob. 7SQCh. 15 - Prob. 8SQCh. 15 - Prob. 9SQCh. 15 - Prob. 10SQCh. 15 - Prob. 11SQCh. 15 - Prob. 12SQCh. 15 - Prob. 13SQCh. 15 - Prob. 14SQCh. 15 - Prob. 15SQCh. 15 - Prob. 16SQCh. 15 - Prob. 17SQCh. 15 - Prob. 18SQCh. 15 - Prob. 19SQCh. 15 - Prob. 20SQ
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Similar questions
- You deposit a $1,000 scholarship check in the bank. If the required reserve ratio is 10 percent, explain how the banking system will create new money and how much money can potentially be created.arrow_forwardIf a bank has excess reserves of $20,000 and demand deposit liabilities of $80,000, and if the reserve requirement is 20 percent, then the bank has total reserves of$36,000arrow_forwardA bank's checkable deposits are $960, its loans are $857 and the bank has reserves of $103. If the bank faces a required reserve ratio of 9%, then what are the bank's current excess reserves?arrow_forward
- If you deposit $40 into a checking account, and your bank has a 10% reserve requirement, the bank's excess reserves will rise by $arrow_forwardExcess reserves are insurance from deposit outflow. Suppose you hold 15 million required reserves and 45 million excess reserves at the central bank. The total interest payment on reserves from the central bank is 0.3%. If you do not hold your excess reserves at the bank, you may take loans and earn 4% in average. What is the cost of holding excess reserve at the central bank?arrow_forwardDraw a simple T-account for First National Bank of Me, which has $9000 of deposits, a reserve ratio of 10 percent, and excess reserves of $300.arrow_forward
- Stealth bank has deposits of $700 million. It holds reserves of $10 million and has purchased government bonds worth $300 million. The banks loans, if sold at current market value, would be worth $600 million. What is the total value of Stealth bank's assets? [REMEMBER TO INCLUDE THE CORRECT NUMBR OF ZEROS IN YOUR ANSWER].arrow_forwardYou are getting married and are unhappy with your present bank. Discuss how you should go about choosing a new bank and opening an account. Consider the factors that are important to you in selecting a bank – such as the type and ownership of accounts (individual or joint) and bank fees and charges, among others.arrow_forwardThe First National Bank of Townville has $125,000 in U.S. government securities, $200,000 in savings accounts, $300,000 in checking accounts, $50,000 in its reserve account at the Fed, $10,000 of currency in its vault, and loans of $250,000. What is the amount of its reserves? Show your calculations.arrow_forward
- Suppose you remove $1000 from under your mattress and deposit it in first national bank. Using a balance sheet, show the impact of your deposit on the banks assets and liabilities. If the required reserve ratio is 10%, what is the maximum amount the bank can loan from this deposit?arrow_forwardDescribe how a bank would characterize loans and bank deposits on its balance sheet. Compare that to how you would characterize the same on your personal balance sheet.arrow_forwardSuppose you remove $1,000 from under your mattress and deposit it in First National Bank. Using a balance sheet, show the impact of your deposit on the bank’s assets and liabilities. If the required reserve ratio is 10 percent, what is the maximum amount the bank can loan from this deposit?arrow_forward
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