a. What is the maximum amount of new loans that Big Bucks Bank can make? Using the table above, show in columns 1 and 1' how the bank's balance sheet will appear after the bank has lent this additional amount by inserting the new values into the gray shaded cells of the given table. b. By how much has the money supply changed? c. How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank? Show the new balance sheet in columns 2 and 2' by inserting the new values into the gray shaded cells of the given table.

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Chapter1: Making Economics Decisions
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What is the maximum amount of new loans that this bank can make?
Show in columns 3 and 3' how the bank's balance sheet will appear after the bank has lent this additional amount. Add the new values
into the gray shaded cells of the given table.
By how much has the money supply changed?
$
How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the
bank? Show the new balance sheet in columns 4 and 4' in the table above. Add the new values into the gray shaded cells of the given
table.
Transcribed Image Text:What is the maximum amount of new loans that this bank can make? Show in columns 3 and 3' how the bank's balance sheet will appear after the bank has lent this additional amount. Add the new values into the gray shaded cells of the given table. By how much has the money supply changed? $ How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank? Show the new balance sheet in columns 4 and 4' in the table above. Add the new values into the gray shaded cells of the given table.
Suppose that Big Bucks Bank has the simplified balance sheet shown below. The reserve ratio is 20 percent.
Assets
Reserves
Securities
Loans
$ 27,000
38,000
35,000
(1)
Assets
Reserves
Securities
Loans
Instructions: Enter your answers as a whole number.
a. What is the maximum amount of new loans that Big Bucks Bank can make?
(2)
$ 27,000
38,000
35,000
Liabilities and net worth
Checkable deposits
(3)
Using the table above, show in columns 1 and 1' how the bank's balance sheet will appear after the bank has lent this additional
amount by inserting the new values into the gray shaded cells of the given table.
b. By how much has the money supply changed?
$
c. How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the
bank? Show the new balance sheet in columns 2 and 2' by inserting the new values into the gray shaded cells of the given table.
d. Using the original figures, revisit questions a, b, and c based on the assumption that the reserve ratio is now 15 percent.
(4)
$100,000
Liabilities and net worth
Checkable deposits
(1¹)
$100,000
(2¹)
(3¹)
(4')
Transcribed Image Text:Suppose that Big Bucks Bank has the simplified balance sheet shown below. The reserve ratio is 20 percent. Assets Reserves Securities Loans $ 27,000 38,000 35,000 (1) Assets Reserves Securities Loans Instructions: Enter your answers as a whole number. a. What is the maximum amount of new loans that Big Bucks Bank can make? (2) $ 27,000 38,000 35,000 Liabilities and net worth Checkable deposits (3) Using the table above, show in columns 1 and 1' how the bank's balance sheet will appear after the bank has lent this additional amount by inserting the new values into the gray shaded cells of the given table. b. By how much has the money supply changed? $ c. How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank? Show the new balance sheet in columns 2 and 2' by inserting the new values into the gray shaded cells of the given table. d. Using the original figures, revisit questions a, b, and c based on the assumption that the reserve ratio is now 15 percent. (4) $100,000 Liabilities and net worth Checkable deposits (1¹) $100,000 (2¹) (3¹) (4')
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