Bank No. 1 Bank No. 2 Bank No. 3 Bank No. 4 New Deposit $100,000.00 $95,000.00 $90,250.00 $85, 737.50 C$50 million. Required Reserve $5,000.00 $4,750.00 $4,512.50 $4,286.87 Refer to Scenario 10.1. Based on the initial $100,000 deposit, the money supply will, at most, expand to $1 million. $2 million. $16.67 million. Loans $95,000.00 $90,250.00 $85,737.50 $81,450.63

Bank No. 1 Bank No. 2 Bank No. 3 Bank No. 4 New Deposit $100,000.00 $95,000.00 $90,250.00 $85, 737.50 C$50 million. Required Reserve $5,000.00 $4,750.00 $4,512.50 $4,286.87 Refer to Scenario 10.1. Based on the initial $100,000 deposit, the money supply will, at most, expand to $1 million. $2 million. $16.67 million. Loans $95,000.00 $90,250.00 $85,737.50 $81,450.63

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the following T-account for National City Bank: Assets Reserves $10,000 Loans $90,000 A) $10,000 If the required reserve ratio is lowered to 8 percent, how much can National City loan out? B) $8,000 C) $2,000 Liabilities D) $0 Deposits $100,000
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You are given the following balance sheet of the Summer Bank (21) Balance sheet of the Winter bank Assets Liabilities Cash $ 8,000 Deposited with the Fed $ 5,000 Loans $ 117,000 Deposits $ 80,000 Capital $ 50,000 Total $ 130,000 Total $ 130,000 The required reserve ratio (RRR) on all deposits is 5% d,What would be the excess reserves of this bank after the RRR is changed to 4%? e.How much new amount of loan will this bank be able to create with the RRR of 4%? f.How much new amount of loan the entire banking system be able to create because of the excess reserves? g.What happened to the money supply after the RRR was decreased to 4% from 5%?
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