QUESTION 33LAST CHANCE BANK OF TOMBSTONE BALANCE SHEETASSETScash in the vault:deposits at FedUS treasury bonds:loans:Building:TOTALS:LIABILITIES & NET WORTH$5,000,000d) $4,000,000e) $5,000,000$900,000 demand deposits:$100,000$300,000$3,700,000$2,000,000 capital stock:$7,000,000TOTALS:$2,000,000$7,000,00033. Assume a required reserve ratio of 10%, banks do not wish to hold excess reserves, and the public does not wish to increase its cash holdings. The maximum amount of new money the banking system can create is:Oa) $400,000b) $500,000c) $900,000

”Excess reserves:Excess reserves are the amount that is in excess and it is held by banks. That…

QUESTION 33 LAST CHANCE BANK OF TOMBSTONE BALANCE SHEET ASSETS cash in the vault: deposits at Fed US treasury bonds: loans: Building: TOTALS: LIABILITIES & $900,000 demand deposits: $100,000 $300,000 $3,700,000 $2,000,000 capital stock: TOTALS: $7,000,000 NET WORTH $5,000,000 $2,000,000 $7,000,000 3. Assume a required reserve ratio of 10%, banks do not wish to hold excess reserves, and the public does not wish to increase its cash holdings. The maximum amount of new money the banking system can create is: a) $400,000 b) $500,000 c) $900,000 Od) $4,000,000 e) $5.000.000

QUESTION 33 LAST CHANCE BANK OF TOMBSTONE BALANCE SHEET ASSETS cash in the vault: deposits at Fed US treasury bonds: loans: Building: TOTALS: LIABILITIES & $900,000 demand deposits: $100,000 $300,000 $3,700,000 $2,000,000 capital stock: TOTALS: $7,000,000 NET WORTH $5,000,000 $2,000,000 $7,000,000 3. Assume a required reserve ratio of 10%, banks do not wish to hold excess reserves, and the public does not wish to increase its cash holdings. The maximum amount of new money the banking system can create is: a) $400,000 b) $500,000 c) $900,000 Od) $4,000,000 e) $5.000.000

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter12: Money And Banking

Section: Chapter Questions

Problem 10E

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Examine the balance sheet of commercial banks in the following table. Liabilities and Net Assets S Billion 96 Total $ Billion 9% Total Worth Real assets Liabilities Equipment and premises 193.7 13 9% Deposits s 10,277.3 67.1 96 Other real Debt and other 48.9 0.3 990.0 6.5 estate borrowed funds Federal funds and Total real assets 2426 16 | % repurchase agreements 942.0 6.2 Other 929.0 6.1 Total liabilities $| 13,138.3 85.8 9% Financial assets Cash 890.3 5.8 % Investment 5,032.1 32.9 securities Loans and 6,711.3 43.8 leases Other financial 1,215.2 7.9 assets Total financial S 13,848.9 90.5 9% assets
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10 Based on the Required Reserves the Reserve Ratio must be ASSETS LIABILITIES Required Reserves $190 Checking Deposits $1,900 Excess Reserves $ 810 Loans $ 900 Total Assets $1,900 Total Liabilities $1,900 5% 10% 20% 19% O None of the above
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Assume that Atlantic National Bank has demand deposits of $100,000 and no excess reserves, and that the reserve requirement is 10 percent. A customer withdraws $5,000 from the bank. To meet the reserve requirement, the bank must increase its reserves by (A) $500 (B) $1,000 (C) $2,000 (D) $4,000 E $4,500