Homework Answers
a.
Answer: the new loan would be 0.
Since the required reserve ratio is 10%, the loan amount would be the difference as below:
Loan = Demand deposit – Required reserve
= 2,000 – (2,000 × 10%)
= 2,000 – 200
= 1,800
It is already there in the bank’s balance sheet; therefore, there should not be any further loan.
b.
Answer: $90
Out of the new deposit, 10% should be kept for required reserve and rest could be provided as loan by the bank.
New loan = New deposit × (1 – required reserve ratio)
= 100 × (1 – 0.10)
= 100 × 0.90
= $90
c.
Answer: $900
Change in loans = New loan / required reserve ratio
= $90 / 0.10
= $900
Note: loan amount increases, since it is positive.
d.
Answer: $1,000
Change in money supply = New DD / required reserve
= $100 / 0.10
= $1,000
Note: money supply increases, since it is positive.
e.
Actual change is $1,000 increasing. It may be smaller than that, if the action of the Fed is to keep more money in the bank vault. There may be a special instruction to all banking system for reducing the supply of money and to keep the inflation under control.
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2.2. Complete the table below for the Third National Bank. You have to distinguish between a...
2.2. Complete the table below for the Third National Bank. You have to distinguish between a bank's assets and bank's liabilities. The figures in the table below are for the Third National Bank. All figures are in thousands of dollars. Assets Liabilities and Net Worth Stock Shares $ 420 $ _____ $ _____ Reserves 25 _____ _____ Property 300 ____ _____ Securities 100 ____ _____ Loans 100 ____ _____ Demand Deposits 105 ____ _____ 2.3. What is the total assets...
I know the answer, but i don’t know how to calculation.
I know the answer, but i don’t know how to calculation.
1) If bank reserves are 200, the public holds 400 in currency, and the desired reserve/deposit ratio is 0.25, the deposits are and the money supply is_ 2) The money supply in Macroland is currently 2,500, bank reserves are 200, currency held by public is 500, and banks' desired reserve/deposit ratio is 0.10. Assuming the values of the currency held by the public and the desired reserve/deposit ratio do...
need answer ASAP please!!! Single bank accounting 1. A simplified balance sheet for the local bank...
need answer ASAP please!!!
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The balance sheet for the newly formed ACME Bank is shown below. The reserves listed on...
The balance sheet for the newly formed ACME Bank is shown below.
The reserves listed on the balance sheet are reserves on deposit at
the Federal Reserve. The cash is the vault cash held in
the bank.
1a)
1b) If the reserve requirement is 10% percent, how much in
excess reserves is the bank holding?_______
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I am unsure if the first part of the answered question is correct, can you please...
I am unsure if the first part of the answered question is correct,
can you please explain how I can go about answering this
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We are given the following information about the assets and liabilities of a bank: a. The...
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a. The Fed sets a reserve requirement of 3% on deposits between
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in US Treasury Securities and $2 million in excess reserves,
compute the bank’s required reserve level and the quantity of loans
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I know the answer, but i don’t know how to calculation.
1) If bank reserves are 200, the public holds 400 in currency, and the desired reserve/deposit ratio is 0.25, the deposits are and the money supply is_ 2) The money supply in Macroland is currently 2,500, bank reserves are 200, currency held by public is 500, and banks' desired reserve/deposit ratio is 0.10. Assuming the values of the currency held by the public and the desired reserve/deposit ratio do...
need answer ASAP please!!!
Single bank accounting 1. A simplified balance sheet for the local bank is shown below. The required reserve ratio is 20%. All figures are in thousands. (Required reserve for only deposits) / Liabilities and net worth Reserves(Fed) Securities Loans Property $1200 Checkable deposits 750 Stock shares 3500 550 1000 a. How much is this bank required to hold in reserve? How much does the bank currently hold in excess reserves? b. Suppose the bank lends out...
The balance sheet for the newly formed ACME Bank is shown below.
The reserves listed on the balance sheet are reserves on deposit at
the Federal Reserve. The cash is the vault cash held in
the bank.
1a)
1b) If the reserve requirement is 10% percent, how much in
excess reserves is the bank holding?_______
Suppose that Goldstar Bank is completely "loaned up." Now
suppose that a customer deposits an additional $40,000 into the
bank. Assume the reserve requirement is...
I am unsure if the first part of the answered question is correct,
can you please explain how I can go about answering this
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% . Edison, a client of First Main Street Bank, deposits $500,000 into his checking account at First Main Street Bank. loans) Complete the following table to reflect any...
We are given the following information about the assets and
liabilities of a bank:
a. The Fed sets a reserve requirement of 3% on deposits between
$16 million and $122 million. If the bank holds $5 million dollars
in US Treasury Securities and $2 million in excess reserves,
compute the bank’s required reserve level and the quantity of loans
this bank is able to make to the public. b. What is the value of
the money multiplier? [Money Multiplier =...
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 5%. Gilberto, a client of First Main Street Bank, deposits $200,000 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 Labilities Complete the following table to show the effect of a...
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