mat Big Bucks Bank has the simplified balance sheet shown below. The reserve ratio is 20 percent. (1) Liabiles and net worth Checkable deposits $ 25,000 $100,000 38.000 37,000 Enter your answers as a whole number the maximum amount of new loans that Big Bucks Bank can make? = able above, show in columns 1 and T how the bank's balance sheet will appear after the bank has lent this inserting the new values into the gray shaded cells of the given table. much has the money supply changed? 1 the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cle Show the new balance sheet in columns 2 and 2 by inserting the new values into the gray shaded cells of original figures, revist questions ab and c based on the assumption that the reserve ratio is now 15 pers

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

4

Suppose that Big Bucks Bank has the simplified balance sheet shown below. The reserve ratio is 20 percent.
Assets
(1)
Liabilities and net worth
Checkable deposits
$ 100,000
Reserves
$ 25,000
Securites
38,000
Loans
37,000
Instructions: Enter your answers as a whole number
a. What is the maximum amount of new loans that Big Bucks Bank can make?
Using the table above, show in columns 1 and T how the bank's balance sheet will appear after the bank has lent this additional
amount by inserting the new values into the gray shaded cells of the given table.
b. By how much has the money supply changed?
c. How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared agains
the bank? Show the new balance sheet in columns 2 and 2 by inserting the new values into the gray shaded cells of the given
table
d. Using the original figures, revisit questions a, b, and c based on the assumption that the reserve ratio is now 15 percent.
Assets
(4)
B
Reserves
$ 25,000
Liabilities and net worth
Checkable deposits
$ 100,000
Securites
38.000
37,000
Transcribed Image Text:Suppose that Big Bucks Bank has the simplified balance sheet shown below. The reserve ratio is 20 percent. Assets (1) Liabilities and net worth Checkable deposits $ 100,000 Reserves $ 25,000 Securites 38,000 Loans 37,000 Instructions: Enter your answers as a whole number a. What is the maximum amount of new loans that Big Bucks Bank can make? Using the table above, show in columns 1 and T how the bank's balance sheet will appear after the bank has lent this additional amount by inserting the new values into the gray shaded cells of the given table. b. By how much has the money supply changed? c. How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared agains the bank? Show the new balance sheet in columns 2 and 2 by inserting the new values into the gray shaded cells of the given table d. Using the original figures, revisit questions a, b, and c based on the assumption that the reserve ratio is now 15 percent. Assets (4) B Reserves $ 25,000 Liabilities and net worth Checkable deposits $ 100,000 Securites 38.000 37,000
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Nash Equilibrium
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education