Suppose the balance sheet of Bigfoot Bank of America is shown below: Assets Liabilities Reserves $100 Deposits $5000 Loans $4900 a) The Reserve Requirement Ratio (RRR) is 0.04 or 4%. What is the Money Multiplier? b) Suppose that Skitch brings in a deposit of $300. What will be the new Deposits, Reserves and Loans amounts immediately after this deposit? Does the bank have any Excess Reserves at this point? How much? Show your work. Deposits Reserves = Loans = Excess Reserves = c) What will be the Deposits, Reserves and Loans amounts after the entire money creation process has been completed. Show your work. Deposits Reserves = Loans =

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
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Chapter1: Making Economics Decisions
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Suppose the balance sheet of Bigfoot Bank of America is shown below:
Assets
Liabilities
Reserves $100
Deposits $5000
Loans $4900
a) The Reserve Requirement Ratio (RRR) is 0.04 or 4%. What is the Money Multiplier?
b) Suppose that Skitch brings in a deposit of $300. What will be the new Deposits,
Reserves and Loans amounts immediately after this deposit? Does the bank have any
Excess Reserves at this point? How much? Show your work.
Deposits =
Reserves
Loans
Excess Reserves =
c) What will be the Deposits, Reserves and Loans amounts after the entire money
creation process has been completed. Show your work.
Deposits =
Reserves =
Loans =
Transcribed Image Text:Suppose the balance sheet of Bigfoot Bank of America is shown below: Assets Liabilities Reserves $100 Deposits $5000 Loans $4900 a) The Reserve Requirement Ratio (RRR) is 0.04 or 4%. What is the Money Multiplier? b) Suppose that Skitch brings in a deposit of $300. What will be the new Deposits, Reserves and Loans amounts immediately after this deposit? Does the bank have any Excess Reserves at this point? How much? Show your work. Deposits = Reserves Loans Excess Reserves = c) What will be the Deposits, Reserves and Loans amounts after the entire money creation process has been completed. Show your work. Deposits = Reserves = Loans =
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