he table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target eserve ratio is 10%. Reserves Loans Assets Securities Fixed assets Total $120,000 $ 680,000 250,000 350,000 $1,400,000 Reserves (1) $1,200,000 $ $ (2) AL a. This bank is (Click to select) by $ b. Suppose that a loan, in the amount of the excess reserves found in part (a), is made to Sats Mundin. Show the resulting balance sheet in columns (1) in the table above. c. Suppose that Sats immediately spends all of his loan by writing a cheque to his psychologist, Freda Freud. She deposits it in her account, which happens to also be at the Maple Leafs Bank. The bank is now (Click to select) by $[ d. Suppose, instead, that the bank makes a loan for the amount in your answer in part (a), which then clears against the Maple Leafs Bank. Show the resulting balance sheet in columns (2) in the table above. e. The Bank now has excess reserves of $[ Suppose that there are a total of 9 other banks in the economy and that the balance sheet for the whole panking system is presented in the table below. Assume that each of the other banks also has a target reserve ratio of 10%. Assets (1 all) Liabilities / Equity Demand deposits < Prev Liabilities / Equity Demand deposits Shareholders' equity Total Search 11 of 14 SAMSUNG Next > $900,000 $ 500,000 n $1,400,000 $9,000,000 $ (1 all) (1) $ (2) M
he table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target eserve ratio is 10%. Reserves Loans Assets Securities Fixed assets Total $120,000 $ 680,000 250,000 350,000 $1,400,000 Reserves (1) $1,200,000 $ $ (2) AL a. This bank is (Click to select) by $ b. Suppose that a loan, in the amount of the excess reserves found in part (a), is made to Sats Mundin. Show the resulting balance sheet in columns (1) in the table above. c. Suppose that Sats immediately spends all of his loan by writing a cheque to his psychologist, Freda Freud. She deposits it in her account, which happens to also be at the Maple Leafs Bank. The bank is now (Click to select) by $[ d. Suppose, instead, that the bank makes a loan for the amount in your answer in part (a), which then clears against the Maple Leafs Bank. Show the resulting balance sheet in columns (2) in the table above. e. The Bank now has excess reserves of $[ Suppose that there are a total of 9 other banks in the economy and that the balance sheet for the whole panking system is presented in the table below. Assume that each of the other banks also has a target reserve ratio of 10%. Assets (1 all) Liabilities / Equity Demand deposits < Prev Liabilities / Equity Demand deposits Shareholders' equity Total Search 11 of 14 SAMSUNG Next > $900,000 $ 500,000 n $1,400,000 $9,000,000 $ (1 all) (1) $ (2) M
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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11
Transcribed Image Text:The table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target
reserve ratio is 10%.
Reserves
Loans
Assets
Securities
Fixed assets
Total
$120,000 $
680,000
250,000
350,000
$1,400,000
(1)
Reserves
$
(2)
$1,200,000 $
Liabilities / Equity
Demand deposits
Shareholders' equity.
Total
a. This bank is (Click to select) by $1
b. Suppose that a loan, in the amount of the excess reserves found in part (a), is made to Sats Mundin. Show the resulting balance
sheet in columns (1) in the table above.
c. Suppose that Sats immediately spends all of his loan by writing a cheque to his psychologist, Freda Freud. She deposits it in her
account, which happens to also be at the Maple Leafs Bank.
< Prev
The bank is now (Click to select) by $
d. Suppose, instead, that the bank makes a loan for the amount in your answer in part (a), which then clears against the Maple Leafs
Bank. Show the resulting balance sheet in columns (2) in the table above.
e. The Bank now has excess reserves of $[
Suppose that there are a total of 9 other banks in the economy and that the balance sheet for the whole banking system is presented
in the table below. Assume that each of the other banks also has a target reserve ratio of 10%.
Assets
(1 all)
O Search
Liabilities / Equity
Demand deposits
11 of 14
FRE
$900,000 $
500,000
SAMSUNG
$1,400,000
Next >
$9,000,000
$
(1 all)
(1)
$
(2)
Transcribed Image Text:he bank is now (Click to select) by $
d. Suppose, instead, that the bank makes a loan for the amount in your answer in part (a), which then clears against the Maple Leafs
Bank. Show the resulting balance sheet in columns (2) in the table above.
e. The Bank now has excess reserves of $
Reserves
Loans
Suppose that there are a total of 9 other banks in the economy and that the balance sheet for the whole banking system is presented
in the table below. Assume that each of the other banks also has a target reserve ratio of 10%.
Assets
(1 all)
Securities
Fixed assets
Total
Bank.
$1,200,000
6,800,000
2,500,000
3,500,000
$14,000,000
$
Demand deposits
Shareholders equity
W
Total
Liabilities/ Equity
< Prev
O Search
f. In the table above, show the balance sheet of this banking system when it is fully loaned up. Use columns (1 all).
g. The increase in the money supply as a result of all the banks becoming fully loaned up is $
11 of 14
SAMSUNG
Next >
$9,000,000
5,000,000
$14,000,000
deposits it in her
76
(1 311)
$
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