GME Bank has hired you to manage the bank's loans. Currently they have $400,000 in checking deposits and the bank plans to keep at least 10% in reserves. Use the bank balance sheet to answer the questions below. Reserves Loans Assets 110,000 290,000 GME Bank Liabilities and Net Worth Checkable deposits 400,000 1. If customers withdraw $40,000 in checking deposits, how much will banks have left in reserves 2. After the withdraw from part 1, how much will the bank be willing to make in new loans? 3. What happens to the total assets of the bank if the liabilities increase by $50,000?

GME Bank has hired you to manage the bank's loans. Currently they have $400,000 in checking deposits and the bank plans to keep at least 10% in reserves. Use the bank balance sheet to answer the questions below. Reserves Loans Assets 110,000 290,000 GME Bank Liabilities and Net Worth Checkable deposits 400,000 1. If customers withdraw $40,000 in checking deposits, how much will banks have left in reserves 2. After the withdraw from part 1, how much will the bank be willing to make in new loans? 3. What happens to the total assets of the bank if the liabilities increase by $50,000?

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 5PA

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Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 44Deposits 255Loans 155 Securities 51Other $X Using the balance sheet above, find the level of excess reserves this bank is holding if the required reserve ratio = 6%(Give answers to 2 decimal places as needed)
Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 32Deposits 205Loans 150 Securities 53Other $X Using the balance sheet above, find the level of required reserves for this bank if the required reserve ratio = 8%(Give answers to 2 decimal places as needed)
05 A bank that has assets of $60 billion and a net worth of $20 billion must have Mc Sraw Hill Multiple Choice excess reserves of $20 billion. O excess reserves of $40 billion. liabilities of $20 billion. liabilities of $40 billion. & V
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1. You deposit $100 of currency into your account. Explain what happens to reserves , checkabledeposits, and monetary base? 2. Explain what the shadow banking system is and how it works. 3. Your bank has the following balance sheet:Assets LiabilitiesReserves $70 million Checkable deposits $200 millionSecurities $50 millionLoans $130 million Bank capital $50 millionIf the required reserve ratio is 10%, what actions should the bank manager take if there is anunexpected deposit outflow of $50 million? Explain your answer. 4. Explain and demonstrate graphically that if the central bank pursues targeting a monetaryaggregate, it is likely to lose control over the interest rate. 5. In the market for reserves, the federal funds rate is equal to the interest rate paid on excessreserves. Explain and demonstrate graphically the effect of an open market sale on the federalfunds rate.
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Your bank has the following balance sheet: Assets Liabilities Checkable Reserves $90 million $380 million deposits $130 Securities million Loans $200 million Bank capital $40 million If the required reserve ratio is 20%, what will be the size of this bank (as measured by its total assets or liabilities) after $20 million deposit outflow if it just meets reserve deficiency by taking out a discount loan from the Federal Reserve? $402 million $400 million. OOOO $420 million. $412 million.
What are the benefits and costs for a bank when itdecides to increase the amount of its bank capital?
BALANCE SHEET OF BANK A (S IN MILLIONS) ASSETS LIABILITIES and NET WORTH Reserves (Cash/Reserves at Fed) 550 Demand Deposits $100 Losns 20 Govt. Securities 90 Net Worth (Owners' Equity) What is the net worth of this bank? 2. If the required reserve is 10%, what is the amount of REQUIRED RESERVES that this bank must bold? 3. What then is the mount of EXCESS RESERVES that this bank is now holding? How much does this bank have available for NEW LOANS? 5. If the required reserve is increased to 20%, whal is the amount of REQUIRED RESERVES that this bank must bold?