Reserves Loans Assets The First Bank of Roswell $30,000 Deposits $170,000 be unable to make any new loans. O have $5,000 in excess reserves. Liabilities Refer to Table 29-3. Suppose the bank faces a reserve requirement of 15 percent. A customer withdraws $25,000 from his account at the bank. If the bank takes no other action, it will have $64,000 in excess reserves. $200,000 be in a position to make new loans equal to a maximum of $3,750.

Reserves Loans Assets The First Bank of Roswell $30,000 Deposits $170,000 be unable to make any new loans. O have $5,000 in excess reserves. Liabilities Refer to Table 29-3. Suppose the bank faces a reserve requirement of 15 percent. A customer withdraws $25,000 from his account at the bank. If the bank takes no other action, it will have $64,000 in excess reserves. $200,000 be in a position to make new loans equal to a maximum of $3,750.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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7. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 10%. Hubert, a client of First Main Street Bank, deposits $500,000 into his checking account at First Main Street Bank. Complete the following table to reflect any changes in First Main Street Bank's T-account (before the bank makes any new loans). Assets Liabilities Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 10%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves Change in Required Reserves (Dollars) (Dollars) (Dollars) 500,000 Now, suppose First Main Street Bank loans out all of its new excess reserves to Eileen, who immediately uses the funds to write a check to Clancy. Clancy…
A bank that has assets of $150 billion and a net worth of $30 billion must have Multiple Choice О liabilities of $30 billion. O liabilities of $120 billion. О excess reserves of $120 billion. excess reserves of $30 billion.
Saved There is a reserve requirement of 23 percent in the United States. If the Federal Reserve makes an open market purchase of $23 million, the money supply will Multiple Choice Graw Hill decrease by $100 million. increase by $529 million. decrease by $529 million. increase by $100 million. 1 ! 87 & R T Y U ( 8 9 1 0 0 D F G H J K
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