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a. The amount of excess reserves is $. b. The maximum amount that loans and deposits could be increased by is $. c. Assume that the system becomes fully loaned up. Show the new balance sheet in the table above. d. Now that the system is fully loaned up, the money supply will have increased by $.

a. The amount of excess reserves is $. b. The maximum amount that loans and deposits could be increased by is $. c. Assume that the system becomes fully loaned up. Show the new balance sheet in the table above. d. Now that the system is fully loaned up, the money supply will have increased by $.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The table below is the balance sheet for all banks combined in the banking system. All banks have a target reserve ratio of 7.5%. Assets $78,000 720,000 100,000 Fixed assets 102,000 Reserves Loans. Securities Total 1,000,000 $ Liabilities/Equity Demand Deposits $900,000 S Shareholders' equity 100,000 Total 1,000,000 a. The amount of excess reserves is $. b. The maximum amount that loans and deposits could be increased by is $. c. Assume that the system becomes fully loaned up. Show the new balance sheet in the table above. d. Now that the system is fully loaned up, the money supply will have increased by $.
Transcribed Image Text:The table below is the balance sheet for all banks combined in the banking system. All banks have a target reserve ratio of 7.5%. Assets $78,000 720,000 100,000 Fixed assets 102,000 Reserves Loans. Securities Total 1,000,000 $ Liabilities/Equity Demand Deposits $900,000 S Shareholders' equity 100,000 Total 1,000,000 a. The amount of excess reserves is $. b. The maximum amount that loans and deposits could be increased by is $. c. Assume that the system becomes fully loaned up. Show the new balance sheet in the table above. d. Now that the system is fully loaned up, the money supply will have increased by $.
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