First National Bank Assets Liabilities and Net Worth US Treasury Bonds $450,000 Net Worth $500,000 Reserves (Cash) $175,000 Checkable Deposits $250,000 Loans $125,000 Second National Bank Assets Liabilities and Net Worth US Treasury Bonds $100,000 Net Worth $250,000 Reserves (Cash) $250,000 Checkable Deposits $100,000 Third National Bank Assets Liabilities and Net Worth US Treasury Bonds $900,000 Net Worth $1,000,00 Reserves (Cash) $350,000 Checkable Deposits $500,000 Loans $250,000 The Required Reserve Ratio is 25% for all banks. Rob, wh banks at Third National, writes a check in the amount of $100,000 to Darrin, a First National customer, who deposits the check in-full into his checking account. List which balance sheet entries at each bank change and what their new values are.

First National Bank Assets Liabilities and Net Worth US Treasury Bonds $450,000 Net Worth $500,000 Reserves (Cash) $175,000 Checkable Deposits $250,000 Loans $125,000 Second National Bank Assets Liabilities and Net Worth US Treasury Bonds $100,000 Net Worth $250,000 Reserves (Cash) $250,000 Checkable Deposits $100,000 Third National Bank Assets Liabilities and Net Worth US Treasury Bonds $900,000 Net Worth $1,000,00 Reserves (Cash) $350,000 Checkable Deposits $500,000 Loans $250,000 The Required Reserve Ratio is 25% for all banks. Rob, wh banks at Third National, writes a check in the amount of $100,000 to Darrin, a First National customer, who deposits the check in-full into his checking account. List which balance sheet entries at each bank change and what their new values are.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The 1980 Depository Institutions Deregulation Money Control Act (DIDMCA) permitted thrift institutions to offer many of the same services as commercial banks. True False
If the reserve ratio was 15% and someone deposited an additional $40,000, what would be the maximum increase in total deposits over time? $6000 $40,000 $60,000 $266,667 $600,000
A bank that has assets of $70 billion and a net worth of $20 billion must have Multiple Choice liabilities of $50 billion. excess reserves of $20 billion. liabilities of $20 billion. excess reserves of $50 billion.
If a bank currently has $10,000 Excess Reserves, $20,000 Required Reserves, and $30,000 Actual Reserves. What is the maximum amount of loans the bank could make? Multiple Choice $10,000 - up to its Excess Reserves $20,000 - up to its Required Reserves Under the above conditions, the bank could not make any additional loans $30,000 - up to its Actual Reserves
9. Bank leverage Use the information presented in Northeastern Mutual Bank's balance sheet to answer the following questions. Bank's Balance Sheet Liabilities and Owners' Equity Assets Reserves $150 Deposits $1,200 Debt Loans $600 $200 Capital (owners' equity) Securities $750 $100 Suppose a new customer adds $100 to his account at Northeastern Mutual Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and the account. This would also bring the leverage ratio from its initial value of to a new value of Which of the following is true of the capital requirement? Check all that apply. Its intended goal is to protect the interests of those who hold equity in the bank. It specifies a minimum leverage ratio for all banks. Its intended goal is to protect the interests of the depositors.
Use the information given in North Central National Bank's balance sheet to answer the following questions. Bank's Balance Sheet Assets Liabilities and Owners' Equity Reserves $200 Deposits $1,600 Loans $800 Debt $250 Securities $1,000 Capital (owners' equity) $150 Suppose a new customer adds $100 to his account at North Central National Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and account. the This would also bring the leverage ratio from its initial value of to a new value of Which of the following do bankers consider when deciding how to allocate their assets? Check all that apply. The size of the monetary base The return on each asset The total value of liabilities
Coin Bank has deposits of $350 million. It holds reserves of $30 million and government bonds worth $70 million. If the bank sells its loans at market value of $400 million, what will its total assets equal? $500 million $750 million $450 million $380 million
QUESTION 24 LAST CHANCE BANK OF TOMBSTONE BALANCE SHEET ASSETS LIABILITIES & NET WORTH $900,000 $100,000 $300,000 $3,700,000 $2.000.000 cash in the vault: demand deposits: $5,000,000 deposits at Fed US treasury bonds: loans: Building: capital stock: $2,000,000 TOTALS: $7,000,000 TOTALS: $7,000,000 24. Given a reserve requirement ratio of 10%, what will be the maximum effect on quantity of money in circulation of a Federal Reserve sale of $100,000 worth of government securities directly to a bank? an increase of $100,000 a decrease of $1,000,000 a decrease of $100,000 an increase of $1,000,000
Use the information given in North Central National Bank's balance sheet to answer the following questions. Assets Reserves Loans Securities Bank's Balance Sheet $200 $800 Liabilities and Owners' Equity $1,600 Deposits Debt $1,000 Capital (owners' equity) $250 $150 Suppose the owners of the bank borrow $100 to supplement their existing reserves. This would increase the reserves account and account. This would also bring the leverage ratio from its initial value of to a new value of Which of the following statements regarding the capital requirement is true? Check all that apply. Its intended goal is to protect the interests of those who hold equity in the bank. It specifies a minimum leverage ratio for all banks. The higher the percentage of assets a bank holds as loans, the higher the capital requirement. the
39. Consider a fractional-reserve banking system in which an initial deposit of $1,000 can generate up to $4,000 in money. What is the reserve ratio? (A) 4 percent. (B) 5 percent. (C) 25 percent. (D) 75 percent.
Complete the table below for the Third National Bank. Classify the assets and liabilities and net worth. What is the total assets of Third National Bank? Assets Liabilities and Net Worth Stock Shares $ 420 ____ ____ Reserves 25 ____ ____ Property 300 ____ ____ Securities 100 ____ ____ Loans 100 ____ _____ Demand Deposits 105 ____ ____
The balance sheet of Nationa Bank is shown below (assume a legal reserve ratio of 10%): Assets Liabilities & Net Worth Reserves 90,000 Checkable Deposits 500,000 Cash 20,000 Stock Shares 270,000 Loans 125,000 Securities 235,000 Property 300,000 1. Based on the balance sheet above, how much money can the bank create? 2. If the bank creates the full amount possible, how much money can the banking system create as a result? 3. If the Federal Reserve raises the reserve ratio to 20%, how much will the bank and banking system be able to create based on the new reserve ratio?