Examine the halance sheet for a bank below: Assets Liabilities Reserves 600 000 Demand Deposits 5 230 000 Loans 2 000 000 Capital 1 250 000 Buildings 3 880 000 If the desired reserve ratio changes to 5 percent and the bank were to loan out those excess reserves, what is the potential expansion in demand deposits (increase in MS) in the banking system? ***You just need to put the number in your answer, no units or commas***

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Examine the Falance sheet for a bank below:
Assets
Liabilities
Reserves
600 000
Demand Deposits
5 230 000
Loans
2 000 000
Capital
1 250 000
Buildings
3 880 000
If the desired reserve ratio changes to 5 percent and the bank were to loan out those excess reserves, what is
the
otential expa
nsion in demand deposits (increase in MS) in the banking system?
***You just need to put the number in your answer, no units or commas***
Answer:
Transcribed Image Text:Examine the Falance sheet for a bank below: Assets Liabilities Reserves 600 000 Demand Deposits 5 230 000 Loans 2 000 000 Capital 1 250 000 Buildings 3 880 000 If the desired reserve ratio changes to 5 percent and the bank were to loan out those excess reserves, what is the otential expa nsion in demand deposits (increase in MS) in the banking system? ***You just need to put the number in your answer, no units or commas*** Answer:
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