The Bank of Uchenna has the following balance sheet. Assets Liabilities and Equity Reserves $30,000 Dêmand deposits $100,000 Loans $70,000 Property S2,000. Equity (net worth) $2,000 Assume that the reserve requirement ratio is 20 percent. a. Calculate the dollar value of the reserves that the Bank of Uchenna is required to hold. b. Given the current reserves, calculate the maximum value of additional loans that the Bank of Uchenna can make. C. Assume that Elike raises $5,000 in cash from a yard sale and deposits the cash in his checking account at the Bank of Uchenna. By how much does the money supply immediately change as a result of Elike's deposit? d. Calculate the maximum change in demand deposits in the banking system as a whole resulting from Elike's deposit. ank of Uchenna is not meeting its reserve requirement, what action can it take to meet the reserve requirement without calling in loans or selling property?

The Bank of Uchenna has the following balance sheet. Assets Liabilities and Equity Reserves $30,000 Dêmand deposits $100,000 Loans $70,000 Property S2,000. Equity (net worth) $2,000 Assume that the reserve requirement ratio is 20 percent. a. Calculate the dollar value of the reserves that the Bank of Uchenna is required to hold. b. Given the current reserves, calculate the maximum value of additional loans that the Bank of Uchenna can make. C. Assume that Elike raises $5,000 in cash from a yard sale and deposits the cash in his checking account at the Bank of Uchenna. By how much does the money supply immediately change as a result of Elike's deposit? d. Calculate the maximum change in demand deposits in the banking system as a whole resulting from Elike's deposit. ank of Uchenna is not meeting its reserve requirement, what action can it take to meet the reserve requirement without calling in loans or selling property?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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