Suppose again that checkable deposits started off as $400,000 in First Main Street Bank, the required reserve ratio (r) is 25%, with and there are no excess reserves and no cash leakage. Suppose the Fed buys $6,000 worth of government securities from First Main Street Bank Complete the following table to reflect the Fed's purchase on the balance sheet for First Main Street Bank. Assets Liabilities Reserves $300,000 Checkable Deposits $400,000 Loans Does First Main Street Bank have any excess reserves now? Yes; the bank has $1,500 in excess reserves. No; the bank has zero excess reserves.
Suppose again that checkable deposits started off as $400,000 in First Main Street Bank, the required reserve ratio (r) is 25%, with and there are no excess reserves and no cash leakage. Suppose the Fed buys $6,000 worth of government securities from First Main Street Bank Complete the following table to reflect the Fed's purchase on the balance sheet for First Main Street Bank. Assets Liabilities Reserves $300,000 Checkable Deposits $400,000 Loans Does First Main Street Bank have any excess reserves now? Yes; the bank has $1,500 in excess reserves. No; the bank has zero excess reserves.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Suppose again that checkable deposits started off as $400,000 in First Main Street Bank, the required reserve ratio (r) is 25%, with and there are no
excess reserves and no cash leakage.
Suppose the Fed buys $6,000 worth of government securities from First Main Street Bank
Complete the following table to reflect the Fed's purchase on the balance sheet for First Main Street Bank.
Assets
Liabilities
Reserves
$300,000
Checkable Deposits
$400,000
Loans
Does First Main Street Bank have any excess reserves now?
Yes; the bank has $1,500 in excess reserves.
No; the bank has zero excess reserves.
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