LAST CHANCE BANK OF TOMBSTONE BALANCE SHEET --- ASSETS LIABILITIES & NET WORTH demand deposits: $5,000,000 $900,000 $100,000 $300,000 $3,700,000 $2,000,000 cash in the vault: deposits at Fed US treasury bonds: loans: Building: capital stock: $2,000,000 TOTALS: $7,000,000 TOTALS: $7,000,000 23. Assume: a required reserve ratio of 20%, banks do not wish to hold excess reserves and the public does not wish to increase its cash holdings. Now assume this bank has just received an additional $100,000 in cash as a loan from another bank, such that the cash it will hold in its vault will increase to $1,000,000. What is the maximum amount of new money the banking system can create? O $900,000 O $400,000 O $500,000 O $1,000,000 O $4,000,000

LAST CHANCE BANK OF TOMBSTONE BALANCE SHEET --- ASSETS LIABILITIES & NET WORTH demand deposits: $5,000,000 $900,000 $100,000 $300,000 $3,700,000 $2,000,000 cash in the vault: deposits at Fed US treasury bonds: loans: Building: capital stock: $2,000,000 TOTALS: $7,000,000 TOTALS: $7,000,000 23. Assume: a required reserve ratio of 20%, banks do not wish to hold excess reserves and the public does not wish to increase its cash holdings. Now assume this bank has just received an additional $100,000 in cash as a loan from another bank, such that the cash it will hold in its vault will increase to $1,000,000. What is the maximum amount of new money the banking system can create? O $900,000 O $400,000 O $500,000 O $1,000,000 O $4,000,000

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter13: Monetary Policy: Conventional And Unconventional

Section: Chapter Questions

Problem 2TY

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