Assume a target reserve ratio of 5%. A cheque for $45000 is drawn on an account in Bank B and deposited in a checking deposit in Bank A. Round your final answers to 2 decimal places, if necessary. Do not enter comma "," or dollar sign ($) while entering your answer. a. By how much have the excess reserves of Bank A increased? b. How much in the form of new loans is Bank A now able to extend to borrowers? c. By how much have reserves of Bank B decreased? d. By how much have excess reserves of Bank B decreased? e. By how much has the money supply increased?
Assume a target reserve ratio of 5%. A cheque for $45000 is drawn on an account in Bank B and deposited in a checking deposit in Bank A. Round your final answers to 2 decimal places, if necessary. Do not enter comma "," or dollar sign ($) while entering your answer. a. By how much have the excess reserves of Bank A increased? b. How much in the form of new loans is Bank A now able to extend to borrowers? c. By how much have reserves of Bank B decreased? d. By how much have excess reserves of Bank B decreased? e. By how much has the money supply increased?
Chapter14: Banking And The Money Supply
Section: Chapter Questions
Problem 2.3P
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Transcribed Image Text:Assume a target reserve ratio of 5%. A cheque for $45000 is drawn on an account in Bank B and deposited in a checking deposit in Bank A.
Round your final answers to 2 decimal places, if necessary. Do not enter comma "," or dollar sign ($) while entering your answer.
a. By how much have the excess reserves of Bank A increased?
b. How much in the form of new loans is Bank A now able to extend to borrowers?
c. By how much have reserves of Bank B decreased?
d. By how much have excess reserves of Bank B decreased?
e. By how much has the money supply increased?
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