7. For this table, assume that all banks observe the same desired reserve ratio. Also assume that the banks are listed in sequential order (thus the loans from the First National Bank become the deposits for the Second National Bank, and the loans from the Second National Bank become the deposits for the Third National Bank, and so on). Also, the bank's balance sheets must always be balanced. Table: Multiple Deposit Expansion First National Bank ASSETS Required reserves Loons TOTAL $368.000 Second National Bank ASSETS Required reserves Loans TOTAL Third National Bank ASSETS Required reserves Loons TOTAL O 8% O 20% LIABILITIES Deposits $400,000 TOTAL LIABILITIES Deposits TOTAL LIABILITIES Deposits TOTAL Refer to the table. For the multiple deposit expansion process described in this table, what is the reserve ratio in this banking system? O 92% 10%
7. For this table, assume that all banks observe the same desired reserve ratio. Also assume that the banks are listed in sequential order (thus the loans from the First National Bank become the deposits for the Second National Bank, and the loans from the Second National Bank become the deposits for the Third National Bank, and so on). Also, the bank's balance sheets must always be balanced. Table: Multiple Deposit Expansion First National Bank ASSETS Required reserves Loons TOTAL $368.000 Second National Bank ASSETS Required reserves Loans TOTAL Third National Bank ASSETS Required reserves Loons TOTAL O 8% O 20% LIABILITIES Deposits $400,000 TOTAL LIABILITIES Deposits TOTAL LIABILITIES Deposits TOTAL Refer to the table. For the multiple deposit expansion process described in this table, what is the reserve ratio in this banking system? O 92% 10%
Chapter14: Banking And The Money Supply
Section: Chapter Questions
Problem 3.4P
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