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. Assets Reserves Loans Securities Total Liabilities $32.7 Checkable deposits $150 Net worth $17.3 $200 Total $180.0 $20.0 $200 a. Calculate the bank's excess reserves. 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.) Reserves Loans Securities Assets What are the bank's new excess reserves? Excess reserves are $21.5 million. (Enter your response rounded to one decimal place.) Liabilities $37.7 Checkable deposits $ 150 Net worth $12.3 $180 $20 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 Now what are the bank's excess reserves? Excess reserves are $☐ million. (Enter your response rounded to one decimal place.) $37.7 Checkable deposits $171.5 Net worth $12.3 Liabilities $201.5 $20
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. Assets Reserves Loans Securities Total Liabilities $32.7 Checkable deposits $150 Net worth $17.3 $200 Total $180.0 $20.0 $200 a. Calculate the bank's excess reserves. 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.) Reserves Loans Securities Assets What are the bank's new excess reserves? Excess reserves are $21.5 million. (Enter your response rounded to one decimal place.) Liabilities $37.7 Checkable deposits $ 150 Net worth $12.3 $180 $20 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 Now what are the bank's excess reserves? Excess reserves are $☐ million. (Enter your response rounded to one decimal place.) $37.7 Checkable deposits $171.5 Net worth $12.3 Liabilities $201.5 $20
Chapter14: Banking And The Money Supply
Section: Chapter Questions
Problem 2.3P
Question
please answer in text form and in proper format answer with must explanation , calculation for each part and steps clearly
![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.
Assets
Reserves
Loans
Securities
Total
Liabilities
$32.7 Checkable deposits
$150 Net worth
$17.3
$200 Total
$180.0
$20.0
$200
a. Calculate the bank's excess reserves.
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.)
Reserves
Loans
Securities
Assets
What are the bank's new excess reserves?
Excess reserves are $21.5 million. (Enter your response rounded to one decimal place.)
Liabilities
$37.7 Checkable deposits
$ 150 Net worth
$12.3
$180
$20
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
Now what are the bank's excess reserves?
Excess reserves are $☐ million. (Enter your response rounded to one decimal place.)
$37.7 Checkable deposits
$171.5 Net worth
$12.3
Liabilities
$201.5
$20](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb1291274-b330-4f4f-9577-593096f241d9%2Fd881b865-2e54-45ac-89e8-5d8b3e9866d7%2F9n7q7nw_processed.png&w=3840&q=75)
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.
Assets
Reserves
Loans
Securities
Total
Liabilities
$32.7 Checkable deposits
$150 Net worth
$17.3
$200 Total
$180.0
$20.0
$200
a. Calculate the bank's excess reserves.
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.)
Reserves
Loans
Securities
Assets
What are the bank's new excess reserves?
Excess reserves are $21.5 million. (Enter your response rounded to one decimal place.)
Liabilities
$37.7 Checkable deposits
$ 150 Net worth
$12.3
$180
$20
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
Now what are the bank's excess reserves?
Excess reserves are $☐ million. (Enter your response rounded to one decimal place.)
$37.7 Checkable deposits
$171.5 Net worth
$12.3
Liabilities
$201.5
$20
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![ECON MACRO](https://www.bartleby.com/isbn_cover_images/9781337000529/9781337000529_smallCoverImage.gif)
![MACROECONOMICS](https://www.bartleby.com/isbn_cover_images/9781337794985/9781337794985_smallCoverImage.gif)
![Brief Principles of Macroeconomics (MindTap Cours…](https://www.bartleby.com/isbn_cover_images/9781337091985/9781337091985_smallCoverImage.gif)
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![ECON MACRO](https://www.bartleby.com/isbn_cover_images/9781337000529/9781337000529_smallCoverImage.gif)
![MACROECONOMICS](https://www.bartleby.com/isbn_cover_images/9781337794985/9781337794985_smallCoverImage.gif)
![Brief Principles of Macroeconomics (MindTap Cours…](https://www.bartleby.com/isbn_cover_images/9781337091985/9781337091985_smallCoverImage.gif)
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Essentials of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781337091992/9781337091992_smallCoverImage.gif)
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Macroeconomics](https://www.bartleby.com/isbn_cover_images/9781337617390/9781337617390_smallCoverImage.gif)
![Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781337617383/9781337617383_smallCoverImage.gif)
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning