AssetsVault CashDeposits at FedLoansTotal$50,000$200,000$600,000$850,000Liabilities and Net WorthFirst Southern's bank reserves are equal to $checking deposits, First Southern' would maintain $reserves over and above the desired amount.Deposits $850,000TotalThe increase in the money supply will be$850,000If First Southern bank wanted to maintain 0.10 of its assets as reserves againstas reserves. Therefore, it would have $as additionalIf First Southern uses the reserves above the desired level to extend additional loans, the money supply would increase bySIf First Southern wanted to maintain 0.05 of its assets as reserves against checking deposits, First Southern' would maintain Sas reserves, additional reserves would be $and the increase in the money supply would be $if First Southern chooses a desired reserve ratio of 0.05.

Assets are resources with a certain value improving the future position of the economy. It can be…

Assets Vault Cash Deposits at Fed Loans Total $50,000 $200,000 $600,000 $850,000 Liabilities and Net Worth First Southern's bank reserves are equal to $ checking deposits, First Southern' would maintain S reserves over and above the desired amount. Deposits $850,000 Total The increase in the money supply will be $850,000 If First Southern bank wanted to maintain 0.10 of its assets as reserves against as reserves. Therefore, it would have S as additional If First Southern uses the reserves above the desired level to extend additional loans, the money supply would increase by If First Southern wanted to maintain 0.05 of its assets as reserves against checking deposits, First Southern' would maintain S and the increase in the money supply would be $ as reserves, additional reserves would be $ if First Southern chooses a desired reserve ratio of 0.05.

Assets Vault Cash Deposits at Fed Loans Total $50,000 $200,000 $600,000 $850,000 Liabilities and Net Worth First Southern's bank reserves are equal to $ checking deposits, First Southern' would maintain S reserves over and above the desired amount. Deposits $850,000 Total The increase in the money supply will be $850,000 If First Southern bank wanted to maintain 0.10 of its assets as reserves against as reserves. Therefore, it would have S as additional If First Southern uses the reserves above the desired level to extend additional loans, the money supply would increase by If First Southern wanted to maintain 0.05 of its assets as reserves against checking deposits, First Southern' would maintain S and the increase in the money supply would be $ as reserves, additional reserves would be $ if First Southern chooses a desired reserve ratio of 0.05.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Monetary System

Section: Chapter Questions

Problem 3PA

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