D2 Suppose a bank's balance sheet looks as follows:AssetsLiabilitiesReserves$2,700 Deposits$10,000Loans$7,300Total assets$ 10,000 Total liabilities10,000Assume banks are required to hold reserves equal to 20 percent of deposits.Instructions: Enter your responses as a whole number.a. How much excess reserves does the bank hold?b. How much more can this bank lend?

The banking system has power to increase the money supply through the credit creation. Capacity to…

Assets Liabilities ves $ 2,700 Deposits $ 10,000 $ 7,300 ssets $ 10,000 Total liabilities $ 10,000 e banks are required to hold reserves equal to 20 percent of deposits ctions: Enter your responses as a whole number. much excess reserves does the bank hold?

Assets Liabilities ves $ 2,700 Deposits $ 10,000 $ 7,300 ssets $ 10,000 Total liabilities $ 10,000 e banks are required to hold reserves equal to 20 percent of deposits ctions: Enter your responses as a whole number. much excess reserves does the bank hold?

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter13: Money And The Financial System

Section: Chapter Questions

Problem 2.8P

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Question

Suppose a bank's balance sheet looks as follows:
Assets
Liabilities
Reserves
$
2,700 Deposits
$
10,000
Loans
$
7,300
Total assets
$ 10,000 Total liabilities
10,000
Assume banks are required to hold reserves equal to 20 percent of deposits.
Instructions: Enter your responses as a whole number.
a. How much excess reserves does the bank hold?
b. How much more can this bank lend?

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