(b) Mahsuri Bank which is one of the local banks in your community has the followingbalance sheet (in billions of RM) as follows:Liabilities3,000 Deposits1,350AssetsRM billionsRM billionsReserves5,000Government securitiesLoans650i.If the required reserve ratio is 0.25 or 25 percent, how much in excessreserves does the bank hold?ii.Determine the maximum amount by which the bank can expand its loan?If the bank makes the loans in (ii), show the immediate impact on the bank'sbalance sheet.ii.

Required reserve ratio implies the percent of demand deposit that a bank needs to keep in reserve…

Mahsuri Bank which is one of the local bankS in your community has the following balance sheet (in billions of RM) as follows: Assets Reserves Government securities RM billions Liabilities 3,000 | Deposits 1,350 650 RM billions 5,000 Loans

Mahsuri Bank which is one of the local bankS in your community has the following balance sheet (in billions of RM) as follows: Assets Reserves Government securities RM billions Liabilities 3,000 | Deposits 1,350 650 RM billions 5,000 Loans

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter14: Banking And The Money Supply

Section: Chapter Questions

Problem 2.3P

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Question

(b) Mahsuri Bank which is one of the local banks in your community has the following
balance sheet (in billions of RM) as follows:
Liabilities
3,000 Deposits
1,350
Assets
RM billions
RM billions
Reserves
5,000
Government securities
Loans
650
i.
If the required reserve ratio is 0.25 or 25 percent, how much in excess
reserves does the bank hold?
ii.
Determine the maximum amount by which the bank can expand its loan?
If the bank makes the loans in (ii), show the immediate impact on the bank's
balance sheet.
ii.

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