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In the following bank balance sheet, amounts are in millions of dollars. The required reserve ratio is 4% on the first $30 million of checkable deposits and 10% on any checkable deposits over $30 million. a. Calculate the bank's excess reserves. Reserves Loans Securities Total Assets Liabilities $32.7 Checkable deposits $150 Net worth $17.3 $200 Total $180.0 $20.0 $200 Excess reserves are $ 16.5 million. (Enter your response rounded to one decimal place.) b. Suppose that the bank sells $5 million in securities to get new cash. Show the bank's balance sheet after this transaction. (Enter your responses rounded to one decimal place.) Assets Reserves Loans Securities What are the bank's new excess reserves? Liabilities $ 37.7 Checkable deposits $150 Net worth $ 12.3 $ 180 $ 20 Excess reserves are $ 21.5 million. (Enter your response rounded to one decimal place.) c. Suppose that the bank loans all its excess reserves in part (b) to a local business. Show the bank's balance sheet after the loan has been made but before the business has spent the proceeds of the loan. (Enter your responses rounded to one decimal place.) Reserves Loans Securities Assets Liabilities Checkable deposits Net worth

In the following bank balance sheet, amounts are in millions of dollars. The required reserve ratio is 4% on the first $30 million of checkable deposits and 10% on any checkable deposits over $30 million. a. Calculate the bank's excess reserves. Reserves Loans Securities Total Assets Liabilities $32.7 Checkable deposits $150 Net worth $17.3 $200 Total $180.0 $20.0 $200 Excess reserves are $ 16.5 million. (Enter your response rounded to one decimal place.) b. Suppose that the bank sells $5 million in securities to get new cash. Show the bank's balance sheet after this transaction. (Enter your responses rounded to one decimal place.) Assets Reserves Loans Securities What are the bank's new excess reserves? Liabilities $ 37.7 Checkable deposits $150 Net worth $ 12.3 $ 180 $ 20 Excess reserves are $ 21.5 million. (Enter your response rounded to one decimal place.) c. Suppose that the bank loans all its excess reserves in part (b) to a local business. Show the bank's balance sheet after the loan has been made but before the business has spent the proceeds of the loan. (Enter your responses rounded to one decimal place.) Reserves Loans Securities Assets Liabilities Checkable deposits Net worth

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Monetary System
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In the following bank balance sheet, amounts are in millions of dollars. The required reserve ratio is 4% on the first $30 million of checkable deposits and 10% on any checkable deposits over $30 million. a. Calculate the bank's excess reserves. Reserves Loans Securities Total Assets Liabilities $32.7 Checkable deposits $150 Net worth $17.3 $200 Total $180.0 $20.0 $200 Excess reserves are $ 16.5 million. (Enter your response rounded to one decimal place.) b. Suppose that the bank sells $5 million in securities to get new cash. Show the bank's balance sheet after this transaction. (Enter your responses rounded to one decimal place.) Assets Reserves Loans Securities What are the bank's new excess reserves? Liabilities $ 37.7 Checkable deposits $150 Net worth $ 12.3 $ 180 $ 20 Excess reserves are $ 21.5 million. (Enter your response rounded to one decimal place.) c. Suppose that the bank loans all its excess reserves in part (b) to a local business. Show the bank's balance sheet after the loan has been made but before the business has spent the proceeds of the loan. (Enter your responses rounded to one decimal place.) Reserves Loans Securities Assets Liabilities Checkable deposits Net worth
Transcribed Image Text:In the following bank balance sheet, amounts are in millions of dollars. The required reserve ratio is 4% on the first $30 million of checkable deposits and 10% on any checkable deposits over $30 million. a. Calculate the bank's excess reserves. Reserves Loans Securities Total Assets Liabilities $32.7 Checkable deposits $150 Net worth $17.3 $200 Total $180.0 $20.0 $200 Excess reserves are $ 16.5 million. (Enter your response rounded to one decimal place.) b. Suppose that the bank sells $5 million in securities to get new cash. Show the bank's balance sheet after this transaction. (Enter your responses rounded to one decimal place.) Assets Reserves Loans Securities What are the bank's new excess reserves? Liabilities $ 37.7 Checkable deposits $150 Net worth $ 12.3 $ 180 $ 20 Excess reserves are $ 21.5 million. (Enter your response rounded to one decimal place.) c. Suppose that the bank loans all its excess reserves in part (b) to a local business. Show the bank's balance sheet after the loan has been made but before the business has spent the proceeds of the loan. (Enter your responses rounded to one decimal place.) Reserves Loans Securities Assets Liabilities Checkable deposits Net worth
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