12. You are given this account for a bank: ASSETS LIABILITIES Reserves $ 500 $3,500 Deposits Loans 3,000 The required reserve ratio is 10 percent. a. How much is the bank required to hold as reserves given its deposits of $3,500? b. How much are its excess reserves? C. By how much can the bank increase its loans?
12. You are given this account for a bank: ASSETS LIABILITIES Reserves $ 500 $3,500 Deposits Loans 3,000 The required reserve ratio is 10 percent. a. How much is the bank required to hold as reserves given its deposits of $3,500? b. How much are its excess reserves? C. By how much can the bank increase its loans?
Chapter14: Banking And The Money Supply
Section: Chapter Questions
Problem 2.3P
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Question
![12. You are given this account for a bank:
ASSETS
LIABILITIES
Reserves
$ 500
$3,500
Deposits
Loans
3,000
The required reserve ratio is 10 percent.
a. How much is the bank required to hold as reserves given its
deposits of $3,500?
b. How much are its excess reserves?
16
c. By how much can the bank increase its loans?
d. Suppose a depositor comes to the bank and withdraws $200
in cash. Show the bank's new balance sheet, assuming the
bank obtains the cash by drawing down its reserves. Does the
bank now hold excess reserves? Is it meeting the required
reserve ratio? If not, what can it do?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffd95f22a-09dc-4232-ac8d-102c7dfa8259%2F9c39ca25-5170-4166-a18f-62d6955b1e35%2Fyy0jwyf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:12. You are given this account for a bank:
ASSETS
LIABILITIES
Reserves
$ 500
$3,500
Deposits
Loans
3,000
The required reserve ratio is 10 percent.
a. How much is the bank required to hold as reserves given its
deposits of $3,500?
b. How much are its excess reserves?
16
c. By how much can the bank increase its loans?
d. Suppose a depositor comes to the bank and withdraws $200
in cash. Show the bank's new balance sheet, assuming the
bank obtains the cash by drawing down its reserves. Does the
bank now hold excess reserves? Is it meeting the required
reserve ratio? If not, what can it do?
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