Refer to the information provided in Table 10.4 below to answer the questions that follow. Table 10.4 First Charter Bank Assets Liabilities $1.2 million $8 million Deposits Reserves Loans $6.8 million Total $8 million $8 million Total 26) Refer to Table 10.4. If the required reserve ratio is 15%, First Charter Bank A) is loaned up. B) has too few reserves on hand. C) is meeting its required reserve ratio and has $200,000 in excess reserves. D) has excess reserves of $100,000. Answer: A Diff: 2 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills 27) Refer to Table 10.4. First Charter Bank could make additional, first round loans of $400,000 if the required reserve ratio were A) 10%. B) 8%. C) 7.5%. D) 12%. Answer: A Diff: 3 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills 28) Refer to Table 10.4. If the required reserve ratio were changed to 5% and First Charter Bank continues to hold $1,200,000 in reserves, its excess reserves will be A) $600,000. B) $1,000,000. C) $800,000. D) $400,000. Answer: C Diff: 2 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills

Refer to the information provided in Table 10.4 below to answer the questions that follow. Table 10.4 First Charter Bank Assets Liabilities $1.2 million $8 million Deposits Reserves Loans $6.8 million Total $8 million $8 million Total 26) Refer to Table 10.4. If the required reserve ratio is 15%, First Charter Bank A) is loaned up. B) has too few reserves on hand. C) is meeting its required reserve ratio and has $200,000 in excess reserves. D) has excess reserves of $100,000. Answer: A Diff: 2 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills 27) Refer to Table 10.4. First Charter Bank could make additional, first round loans of $400,000 if the required reserve ratio were A) 10%. B) 8%. C) 7.5%. D) 12%. Answer: A Diff: 3 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills 28) Refer to Table 10.4. If the required reserve ratio were changed to 5% and First Charter Bank continues to hold $1,200,000 in reserves, its excess reserves will be A) $600,000. B) $1,000,000. C) $800,000. D) $400,000. Answer: C Diff: 2 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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