Assume that there are 2 chartered banks and their T-accounts are below. Suppose that there are currently deposits of $680,000 in Bank A. Amandeep borrows $320,000 from Bank A for a housing deposit to Rui Wang. Rui Wang takes that deposit and puts it into his bank, which is Bank B. The required reserve ratio is 5% for all banks. Assume that each bank will use the deposits to make loans and not save any for bank capital or bond purchases. You can use the following balance sheets, for Bank A and Bank B to help you answer the question: What are the excess reserves in Bank B after the initial reserves and loans are made by the bank?
Assume that there are 2 chartered banks and their T-accounts are below. Suppose that there are currently deposits of $680,000 in Bank A. Amandeep borrows $320,000 from Bank A for a housing deposit to Rui Wang. Rui Wang takes that deposit and puts it into his bank, which is Bank B. The required reserve ratio is 5% for all banks. Assume that each bank will use the deposits to make loans and not save any for bank capital or bond purchases. You can use the following balance sheets, for Bank A and Bank B to help you answer the question: What are the excess reserves in Bank B after the initial reserves and loans are made by the bank?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Assume that there are 2 chartered banks and their T-accounts are below. Suppose that there
are currently deposits of $680,000 in Bank A. Amandeep borrows $320,000 from Bank A for a
housing deposit to Rui Wang. Rui Wang takes that deposit and puts it into his bank, which is Bank
B. The required reserve ratio is 5% for all banks. Assume that each bank will use the deposits to
make loans and not save any for bank capital or bond purchases.
You can use the following balance sheets, for Bank A and Bank B to help you answer the question:
What are the excess reserves in Bank B after the initial reserves and loans are made by the bank?
Bank A's Balance Sheet
Reserves:
Loans:
Reserves:
Loans:
Assets
Assets
Liabilities.
Demand Deposits:
Bank B's Balance Sheet
Liabilities
Demand Deposits:
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