Suppose the following simplified consolidated balance sheet is is for the entire commercial banking system and that all figures are in billions of dollars. The reserve ratio is 25%. Assets (1) Liabilities and networth (1’) Reserve $52 Checkable deposits $200 Securities $48 Loans $100 a. What is the amount of excess reserves in this commercial banking system? What is the maximum amount the banking system might lend? What is the size of the monetary multiplier? b. Answer the questions in part a assuming the reserve ratio is 20%. What is the resulting difference in the amount that the commercial banking system can lend?
Suppose the following simplified consolidated
|
Assets (1) |
Liabilities and networth (1’) |
||||
|
Reserve |
$52 |
|
Checkable deposits |
$200 |
|
|
Securities |
$48 |
|
|
|
|
|
Loans |
$100 |
|
|
|
|
a. What is the amount of
b. Answer the questions in part a assuming the reserve ratio is 20%. What is the resulting difference in the amount that the commercial banking system can lend?
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