Marly Bank currently has $650M in transaction deposits on its balance sheet. The current reserve requirenment is 10 percent, but the Federal Reserve is decreasing this requirement to 9 percent. Show the balance sheet for the federal reserve and Marly Bank if Marly Bank converts all excess reseves to loans, but borrowers return only 60 percent of these funds to National Bank as transaction deposit.
Marly Bank currently has $650M in transaction deposits on its balance sheet. The current reserve requirenment is 10 percent, but the Federal Reserve is decreasing this requirement to 9 percent. Show the balance sheet for the federal reserve and Marly Bank if Marly Bank converts all excess reseves to loans, but borrowers return only 60 percent of these funds to National Bank as transaction deposit.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Marly Bank currently has $650M in
transaction deposits on its
The current reserve requirenment is 10
percent, but the Federal Reserve is
decreasing this requirement to 9 percent.
Show the balance sheet for the federal
reserve and Marly Bank if Marly Bank
converts all excess reseves to loans, but
borrowers return only 60 percent of these
funds to National Bank as transaction
deposit.
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