Suppose that Big Bucks Bank has the simplified balance sheet shown below. The reserve ratio is 20 percent. Assets Reserves Securities Loans $ 27,000 38,000 35,000 (1) Assets Reserves Securities Loans b. By how much has the money supply changed? $ (2) $ 27,000 38,000 35,000 Instructions: Enter your answers as a whole number. a. What is the maximum amount of new loans that Big Bucks Bank can make? $ Using the table above, show in columns 1 and 1' how the bank's balance sheet will appear after the bank has lent this additional amount by inserting the new values into the gray shaded cells of the given table. (3) Liabilities and net worth Checkable deposits c. How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank? Show the new balance sheet in columns 2 and 2' by inserting the new values into the gray shaded cells of the given table. d. Using the original figures, revisit questions a, b, and c based on the assumption that the reserve ratio is now 15 percent. (4) $ 100,000 Liabilities and net worth Checkable deposits (1') $ 100,000 (2¹) (3¹) (4') What is the maximum amount of new loans that this bank can make? $ Show in columns 3 and 3' how the bank's balance sheet will appear after the bank has lent this additional amount. Add the new values into the gray shaded cells of the given table. By how much has the money supply changed? How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank? Show the new balance sheet in columns 4 and 4' in the table above. Add the new values into the gray shaded cells of the given table.
Suppose that Big Bucks Bank has the simplified balance sheet shown below. The reserve ratio is 20 percent. Assets Reserves Securities Loans $ 27,000 38,000 35,000 (1) Assets Reserves Securities Loans b. By how much has the money supply changed? $ (2) $ 27,000 38,000 35,000 Instructions: Enter your answers as a whole number. a. What is the maximum amount of new loans that Big Bucks Bank can make? $ Using the table above, show in columns 1 and 1' how the bank's balance sheet will appear after the bank has lent this additional amount by inserting the new values into the gray shaded cells of the given table. (3) Liabilities and net worth Checkable deposits c. How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank? Show the new balance sheet in columns 2 and 2' by inserting the new values into the gray shaded cells of the given table. d. Using the original figures, revisit questions a, b, and c based on the assumption that the reserve ratio is now 15 percent. (4) $ 100,000 Liabilities and net worth Checkable deposits (1') $ 100,000 (2¹) (3¹) (4') What is the maximum amount of new loans that this bank can make? $ Show in columns 3 and 3' how the bank's balance sheet will appear after the bank has lent this additional amount. Add the new values into the gray shaded cells of the given table. By how much has the money supply changed? How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank? Show the new balance sheet in columns 4 and 4' in the table above. Add the new values into the gray shaded cells of the given table.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Suppose that Big Bucks Bank has the simplified balance sheet shown below. The reserve ratio is 20 percent.
Assets
Reserves
Securities
Loans
$ 27,000
38,000
35,000
Assets
Reserves
Securities
Loans
(1)
$
27,000
38,000
35.000
(2)
Instructions: Enter your answers as a whole number.
a. What is the maximum amount of new loans that Big Bucks Bank can make?
$
Using the table above, show in columns 1 and 1' how the bank's balance sheet will appear after the bank has lent this additional
amount by inserting the new values into the gray shaded cells of the given table.
b. By how much has the money supply changed?
$
(3)
Liabilities and net worth
Checkable deposits
c. How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the
bank? Show the new balance sheet in columns 2 and 2' by inserting the new values into the gray shaded cells of the given table.
d. Using the original figures, revisit questions a, b, and cbased on the assumption that the reserve ratio is now 15 percent.
(4)
$100,000
Liabilities and net worth
Checkable deposits
(1¹)
$100,000
(2¹)
(3¹)
(4')
What is the maximum amount of new loans that this bank can make?
$
Show in columns 3 and 3' how the bank's balance sheet will appear after the bank has lent this additional amount. Add the new values
into the gray shaded cells of the given table.
By how much has the money supply changed?
$
How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the
bank? Show the new balance sheet in columns 4 and 4' in the table above. Add the new values into the gray shaded cells of the given
table.
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