Question 25Banks wish to hold no excess reserves, desired reserve ratio is the same for allNot yetansweredbanks and there is no currency drain.Marked out ofThe following T-account represents the balance sheet of ABC commercial1.00bank:P FlagquestionAssetsLiabilitiesDeposits ?CapitalReserves 194Loans2781203How much are the deposits at bank ABC?Select one:O a. 2772.00O b. None of the answers offered are correctc. 2384.00O d. 3178.00e. 2790.00

The primary rule for a T account it was that Assets are equal to liabilities.

Banks wish to hold no excess reserves, desired reserve ratio is the same for all banks and there is no currency drain. The following T-account represents the balance sheet of ABC commercial bank: Assets Liabilities Reserves 194 Deposits ? Capital Loans 2781 203 How much are the deposits at bank ABC?

Banks wish to hold no excess reserves, desired reserve ratio is the same for all banks and there is no currency drain. The following T-account represents the balance sheet of ABC commercial bank: Assets Liabilities Reserves 194 Deposits ? Capital Loans 2781 203 How much are the deposits at bank ABC?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter12: Money, Banking And The Financial System

Section12.3: How Banking Developed

Problem 3ST

See similar textbooks

Similar questions

Assume that a bank has on its asset side reserves of 1000 and loans of 6000 and on itsliability side deposits of 7000. Assume that the required reserve ratio is 10 percent.a. How much is the bank required to hold as reserves given its deposits of 7000?
Assume that a bank has on its asset side reserves of 1000 and loans of 6000 and on its liability side deposits of 7000. Assume that the required reserve ratio is 10 percent. a. How much are its excess reserve.
§Suppose that the T-account for First National Bank is as follows: Assets Liabilities Reserves: 90.000-TL Deposits: 500.000-TL Loans: 410.000-TL § §If the Central Bank requires banks to hold 10% of deposits as reserves, how much in excess reserves does First National Bank now hold? MM=1/rr MM=1/(10/100) MM=10 40000*10=400000TL §Assume that all other banks hold only the required amount of reserves. If First National decides to reduce its reserves to only the required amount, by how much would the economy’s money supply increases?
You take $100 you had kept under your mattressand deposit it in your bank account. If this $100stays in the banking system as reserves and if bankshold reserves equal to 10 percent of deposits, byhow much does the total amount of deposits in thebanking system increase? By how much does themoney supply increase?
A bank faces a required reserve ratio of 5 percent.If the bank has $200 million of checkabledeposits and $15 million of total reserves, thenhow large are the bank's excess reserves?a. $0b. $5 millionc. $10 milliond. $15 million
. Suppose that the T-account for Nan Bank Inc. is as follows:Assets LiabilitiesReserves $100,000Loans $400,000 Deposits $500,000. If the Bank of Canada requires banks to hold 5 percent of deposits reserves, how much in excess reserves does Nan Bank Inc. now hold?Assume that all other banks hold only the required amount of reserves. IfNan Bank Inc. decides to reduce its reserves to only the required amount, byhow much would the economy's money supply increase?
In Exhibit 5 if the required reserve ratio is 20 percentfor all banks and every bank in the banking systemloans out all of its excess reserves, then a $10,000deposit from Mr. Brown in checkable deposits couldcreate for the entire banking systema. $8,000 worth of new money.b. $2,000 worth of new money.c. $10,000 worth of new money.d. $40,000 worth of new money.
Assume that a bank has on its asset side reserves of 1000 and loans of 6000 and on itsliability side deposits of 7000. Assume that the required reserve ratio is 10 percent.a. Calculate the excess reserve ?
suppose the reserve requirement is 10 percent and the balance sheet of the peoples national bank looks like the accompanying example.ASSETSvault cash - $20,000deposits at fed - 30,000securities - 45,000loans - 120,000LIABILITIESchecking deposits - $200,000net worth - 15,000answer the following:A. what are the required reserves of people national bank? does the bank have any excess reserves?B. what is the maximum loan that the bank could extend?C. indicate how the banks balance sheet would be altered if it extended this loan.D. suppose that the required reserves were 20 percent. if this were the case, would the bank be in a position to extend any additional loans? explain
Beleaguered State Bank (BSB) holds $250 million indeposits and maintains a reserve ratio of 10 percent.a. Show a T-account for BSB.b. Now suppose that BSB’s largest depositorwithdraws $10 million in cash from her accountand that BSB decides to restore its reserve ratio byreducing the amount of loans outstanding. Showits new T-account
Suppose that National bank has $36 million in checkable deposits, Commonwealth bank has $45 million in checkable deposits and the required reserve ratio for checkable deposits is 10%. If the National bank has $4 million in reserves and Commonwealth has $5 million iin reserves, how much excess reserves does each bank have? Suppose that a customer of the National bank writies a check for $2 million to a real estate broker who deposits the check at Commonwealth bank. After the check clears, how much excess reserves does each bank have?
The central bank buys worth of bonds in the open market from Joe, who deposits the proceedsin his checking account at Bank. The required reserve ratio is .(a) What is the amount by which Bank’s liabilities have changed? Explain.(b) Calculate the change in required reserves for Bank. Show your work.(c) What is the dollar value of the maximum amount of new loans Bank can initially make as aresult of Joe’s deposit? Explain.(d) Based on the central bank’s open-market purchase of bonds, calculate the maximum amount bywhich the money supply can change throughout the banking system. Show your work.(e) How will the change in the money supply in part (d) affect aggregate demand and the price level inthe short run? Explain