You are given the following balance sheet of the Summer Bank (21) Balance sheet of the Winter bank Assets Liabilities Cash $ 8,000 Deposited with the Fed $ 5,000 Loans $ 117,000 Deposits $ 80,000 Capital $ 50,000 Total $ 130,000 Total $ 130,000 The required reserve ratio (RRR) on all deposits is 5% What, if any, are this bank's excess reserves? How much new amount of loan will this bank be able to create because of the excess reserves? How much new amount of loan the entire banking system be able to create because of the excess reserves? What would be the excess reserves of this bank after the RRR is changed to 4%? How much new amount of loan will this bank be able to create with the RRR of 4%? How much new amount of loan the entire banking system be able to create because of the excess reserves? What happened to the money supply after the RRR was decreased to 4% from 5%?
- You are given the following balance sheet of the Summer Bank (21)
Balance sheet of the Winter bank
|
Assets |
Liabilities |
|
Cash $ 8,000 Deposited with the Fed $ 5,000
Loans $ 117,000
|
Deposits $ 80,000
Capital $ 50,000 |
|
Total $ 130,000 |
Total $ 130,000 |
The
- What, if any, are this bank's
excess reserves ? - How much new amount of loan will this bank be able to create because of the excess reserves?
- How much new amount of loan the entire banking system be able to create because of the excess reserves?
- What would be the excess reserves of this bank after the RRR is changed to 4%?
- How much new amount of loan will this bank be able to create with the RRR of 4%?
- How much new amount of loan the entire banking system be able to create because of the excess reserves?
- What happened to the money supply after the RRR was decreased to 4% from 5%?
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The "reserve requirement ratio" is the percentage of customer deposits and other liquid assets that commercial banks must keep in-house or with the central bank. The reserve ratio is the percentage of reservable liabilities that commercial banks must keep rather than lend or invest. The reserve requirement is the minimum amount of reserves that a bank must keep on hand, and it is sometimes used interchangeably with the reserve ratio. The reserve ratio is the percentage of a commercial bank's deposits that it must keep in cash as a reserve in the event of mass customer withdrawals, as determined by the central bank.
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