Answered: ASSETS cash in the vault: deposit at…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

01. This bank's actual reserves are $_______

02. Assuming a required reserve ratio of 10%, this bank's requirered reserves are $_______.

3. Assuming a required reserve ratio of 10%, the amount of money that the whole baning system can create is $_____

4. Assuming a required reserve ratio of 20%, the impact on the quantity of money issued by the whole banking system will be $__________.

ASSETS
cash in the vault:
deposit at the Fed
US treasury bonds:
loans:
building:
TOTALS:
LIABILITIES & NET WORTH
$300,000 demand deposits*: $5,000,000
$300,000
$100,000
$2,900,000
$600,000
$5,600,000
$2,000,000 capital stock:
$5,600,000 TOTALS:
*Note: demand deposits are regular checking accounts

Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

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