4 Suppose that Big Bucks Bank has the simplified balance sheet shown below. The reserve ratio is 20 percent.Assets(1)Liabilities and net worthCheckable deposits$ 100,000Reserves$ 25,000Securites38,000Loans37,000Instructions: Enter your answers as a whole numbera. What is the maximum amount of new loans that Big Bucks Bank can make?Using the table above, show in columns 1 and T how the bank's balance sheet will appear after the bank has lent this additionalamount by inserting the new values into the gray shaded cells of the given table.b. By how much has the money supply changed?c. How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared againsthe bank? Show the new balance sheet in columns 2 and 2 by inserting the new values into the gray shaded cells of the giventabled. Using the original figures, revisit questions a, b, and c based on the assumption that the reserve ratio is now 15 percent.Assets(4)BReserves$ 25,000Liabilities and net worthCheckable deposits$ 100,000Securites38.00037,000

mat Big Bucks Bank has the simplified balance sheet shown below. The reserve ratio is 20 percent. (1) Liabiles and net worth Checkable deposits $ 25,000 $100,000 38.000 37,000 Enter your answers as a whole number the maximum amount of new loans that Big Bucks Bank can make? = able above, show in columns 1 and T how the bank's balance sheet will appear after the bank has lent this inserting the new values into the gray shaded cells of the given table. much has the money supply changed? 1 the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cle Show the new balance sheet in columns 2 and 2 by inserting the new values into the gray shaded cells of original figures, revist questions ab and c based on the assumption that the reserve ratio is now 15 pers

mat Big Bucks Bank has the simplified balance sheet shown below. The reserve ratio is 20 percent. (1) Liabiles and net worth Checkable deposits $ 25,000 $100,000 38.000 37,000 Enter your answers as a whole number the maximum amount of new loans that Big Bucks Bank can make? = able above, show in columns 1 and T how the bank's balance sheet will appear after the bank has lent this inserting the new values into the gray shaded cells of the given table. much has the money supply changed? 1 the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cle Show the new balance sheet in columns 2 and 2 by inserting the new values into the gray shaded cells of original figures, revist questions ab and c based on the assumption that the reserve ratio is now 15 pers

Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: The Monetary System

Section: Chapter Questions

Problem 5PA

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Suppose that Big Bucks Bank has the simplified balance sheet shown below. The reserve ratio is 10 percent. Assets (1) (2) Liabilities and net worth (1') (2') Reserves $23,000 Checkable deposits $100,000 Securities 38,000 Loans 39,000 a. What is the maximum amount of new loans that Big Bucks Bank can make? $__________ Using the table above, show in columns 1 and 1' how the bank's balance sheet will appear after the bank has lent this additional amount by inserting the new values into the gray shaded cells of the given table. b. By how much has the money supply changed? $__________ c. How will the bank’s balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank? Show the new balance sheet in columns 2 and 2' by inserting the new values into the gray shaded cells of the given table. d. Using the original figures, revisit questions a, b, and c based on the assumption…
Suppose the simplified consolidated balance sheet shown below is for the entire commercial banking system and that all figures are in billions of dollars. The reserve ratio is 10 percent. Instructions: Enter your answers as a whole number. a. What is the amount of excess reserves in this commercial banking system? $ billion What is the maximum amount the banking system might lend? $ billion Show in columns 1(a) and 1'(a) how the consolidated balance sheet would look after this amount has been lent. Enter these new values in the gray shaded cells of the given table. What is the size of the monetary multiplier? b. Using the original figures, answer the questions in part a assuming the reserve ratio is 5 percent. What is the amount of excess reserves in this commercial banking system? $ billion What is the maximum amount the banking system might lend? $ billion Show in columns 1(b) and 1'(b) how the…
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 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
suppose the required reserve ratio is 30%. How much can the entire banking system loan out? 2. if the entire amount of excess reserves were loaned out, what would happen to Money supply? 3. Now suppose the required reserve ratio was raised to 40%, and assume all excess reserves are lent out, what is the maximum amount of money the banking system could lend? 4. using the same situation as in “c”, suppose now that an entity, bought $1 T worth of bonds from the banking system. What is your answer to “c”?
Assume the Continental National Bank's balance statement is as follows:Assets:reserves $40,000loans $25,000securities $110,000Liabilities + net worthcheckable deposits $130,000stock shares $45,000Assuming a legal reserve ratio of 20 percent, how much in excess reserves would this bank have after a check for $10,000 was drawn and cleared against it?$3,000.$24,000.$6,000.$16,000.
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 ?
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
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Marly Bank currently has $650M in transaction deposits on its balance sheet. The current reserve requirenment is 10 percent, but the Federal Reserve is decreasing this requirement to 9 percent. Show the balance sheet for the federal reserve and Marly Bank if Marly Bank converts all excess reseves to loans, but borrowers return only 60 percent of these funds to National Bank as transaction deposit.
Suppose again that the Third National Bank has reserves of $20,000 and checkable deposits of $100,000. The reserve ratio is 20 percent. The bank now sells $5000 in securities to the Federal Reserve Bank in its district, receiving a $5000 increase in reserves in return. What level of excess reserves does the bank now have? Why does your answer differ (yes, it does!) from the answer to question 9?