Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
need answers for part b)
![Suppose the balance sheet of Bigfoot Bank of America is shown below:
Assets
Liabilities
Reserves $100
Deposits $5000
Loans $4900
a) The Reserve Requirement Ratio (RRR) is 0.04 or 4%. What is the Money Multiplier?
b) Suppose that Skitch brings in a deposit of $300. What will be the new Deposits,
Reserves and Loans amounts immediately after this deposit? Does the bank have any
Excess Reserves at this point? How much? Show your work.
Deposits =
Reserves
Loans
Excess Reserves =
c) What will be the Deposits, Reserves and Loans amounts after the entire money
creation process has been completed. Show your work.
Deposits =
Reserves =
Loans =](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4db3c461-bd3b-48a1-8065-98717f167121%2F2736e208-edde-4c64-9af9-b09ad5aaac0b%2F99u7048_processed.png&w=3840&q=75)
Transcribed Image Text:Suppose the balance sheet of Bigfoot Bank of America is shown below:
Assets
Liabilities
Reserves $100
Deposits $5000
Loans $4900
a) The Reserve Requirement Ratio (RRR) is 0.04 or 4%. What is the Money Multiplier?
b) Suppose that Skitch brings in a deposit of $300. What will be the new Deposits,
Reserves and Loans amounts immediately after this deposit? Does the bank have any
Excess Reserves at this point? How much? Show your work.
Deposits =
Reserves
Loans
Excess Reserves =
c) What will be the Deposits, Reserves and Loans amounts after the entire money
creation process has been completed. Show your work.
Deposits =
Reserves =
Loans =
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