In the following bank balance sheet, amounts are in millions of dollars. The required reserve ratio is 4% on the first $30 million of checkable deposits and 10% on any checkable deposits over $30 million. a. Calculate the bank's excess reserves. Reserves Loans Securities Total Assets Liabilities $32.7 Checkable deposits $150 Net worth $17.3 $200 Total $180.0 $20.0 $200 Excess reserves are $ 16.5 million. (Enter your response rounded to one decimal place.) b. Suppose that the bank sells $5 million in securities to get new cash. Show the bank's balance sheet after this transaction. (Enter your responses rounded to one decimal place.) Assets Reserves Loans Securities What are the bank's new excess reserves? Liabilities $ 37.7 Checkable deposits $150 Net worth $ 12.3 $ 180 $ 20 Excess reserves are $ 21.5 million. (Enter your response rounded to one decimal place.) c. Suppose that the bank loans all its excess reserves in part (b) to a local business. Show the bank's balance sheet after the loan has been made but before the business has spent the proceeds of the loan. (Enter your responses rounded to one decimal place.) Reserves Loans Securities Assets Liabilities Checkable deposits Net worth
In the following bank balance sheet, amounts are in millions of dollars. The required reserve ratio is 4% on the first $30 million of checkable deposits and 10% on any checkable deposits over $30 million. a. Calculate the bank's excess reserves. Reserves Loans Securities Total Assets Liabilities $32.7 Checkable deposits $150 Net worth $17.3 $200 Total $180.0 $20.0 $200 Excess reserves are $ 16.5 million. (Enter your response rounded to one decimal place.) b. Suppose that the bank sells $5 million in securities to get new cash. Show the bank's balance sheet after this transaction. (Enter your responses rounded to one decimal place.) Assets Reserves Loans Securities What are the bank's new excess reserves? Liabilities $ 37.7 Checkable deposits $150 Net worth $ 12.3 $ 180 $ 20 Excess reserves are $ 21.5 million. (Enter your response rounded to one decimal place.) c. Suppose that the bank loans all its excess reserves in part (b) to a local business. Show the bank's balance sheet after the loan has been made but before the business has spent the proceeds of the loan. (Enter your responses rounded to one decimal place.) Reserves Loans Securities Assets Liabilities Checkable deposits Net worth
Chapter14: Banking And The Money Supply
Section: Chapter Questions
Problem 2.3P
Related questions
Question
please answer in text form and in proper format answer with must explanation , calculation for each part and steps clearly
Transcribed Image Text:In the following bank balance sheet, amounts are in millions of dollars. The required reserve ratio is 4% on the first $30 million of checkable deposits and 10% on any checkable deposits over $30 million.
a. Calculate the bank's excess reserves.
Reserves
Loans
Securities
Total
Assets
Liabilities
$32.7 Checkable deposits
$150 Net worth
$17.3
$200 Total
$180.0
$20.0
$200
Excess reserves are $ 16.5 million. (Enter your response rounded to one decimal place.)
b. Suppose that the bank sells $5 million in securities to get new cash. Show the bank's balance sheet after this transaction. (Enter your responses rounded to one decimal place.)
Assets
Reserves
Loans
Securities
What are the bank's new excess reserves?
Liabilities
$ 37.7 Checkable deposits
$150 Net worth
$ 12.3
$ 180
$ 20
Excess reserves are $ 21.5 million. (Enter your response rounded to one decimal place.)
c. Suppose that the bank loans all its excess reserves in part (b) to a local business. Show the bank's balance sheet after the loan has been made but before the business has spent the proceeds of the
loan. (Enter your responses rounded to one decimal place.)
Reserves
Loans
Securities
Assets
Liabilities
Checkable deposits
Net worth
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning