The table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target reserve ratio is 10%. Reserves Loans Assets Securities Fixed assets Total $120,000 $ 680,000 250,000 350,000 $1,400,000 (1) 90,000 $ 710,000 250,000 350,000 1,430,000 (2) Liabilities / Equity Demand deposits Shareholders equity Total $900,000 $ 500,000 $1,400,000 a. This bank is over-reserved by $30,000 b. Suppose that a loan, in the amount of the excess reserves found in part (a), is made to Sats Mundin. Show the resulting balance sheet in columns (1) in the table above. loan for the amount in your answer in c. Suppose that Sats immediately spends all of his loan by writing a cheque to his psychologist, Freda Freud. She deposits it in her account, which happens to also be at the Maple Leafs Bank. The bank is now over-reserved by $30,000. d. Suppose, instead, that the bank makes Bank. Show the resulting balan (1) $ (2)

The table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target reserve ratio is 10%. Reserves Loans Assets Securities Fixed assets Total $120,000 $ 680,000 250,000 350,000 $1,400,000 (1) 90,000 $ 710,000 250,000 350,000 1,430,000 (2) Liabilities / Equity Demand deposits Shareholders equity Total $900,000 $ 500,000 $1,400,000 a. This bank is over-reserved by $30,000 b. Suppose that a loan, in the amount of the excess reserves found in part (a), is made to Sats Mundin. Show the resulting balance sheet in columns (1) in the table above. loan for the amount in your answer in c. Suppose that Sats immediately spends all of his loan by writing a cheque to his psychologist, Freda Freud. She deposits it in her account, which happens to also be at the Maple Leafs Bank. The bank is now over-reserved by $30,000. d. Suppose, instead, that the bank makes Bank. Show the resulting balan (1) $ (2)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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