Need help with this question solution general accounting Suppose the required reserve ratio is .15 andindividuals hold no cash. Total bank depositsare $100 million and the banks hold $20 millionin reserves. How much more money can thebank create if it does not hold excess reserves?A. $33 millionB. $66 millionC. $100 millionD. $667 million

Step 1: Define Total bank depositsTotal bank deposits are the total sum of money which are submitted…

Answered: Suppose the required reserve ratio is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Examine the Falance sheet for a bank below: Assets Liabilities Reserves 600 000 Demand Deposits 5 230 000 Loans 2 000 000 Capital 1 250 000 Buildings 3 880 000 If the desired reserve ratio changes to 5 percent and the bank were to loan out those excess reserves, what is the otential expa nsion in demand deposits (increase in MS) in the banking system? ***You just need to put the number in your answer, no units or commas*** Answer:
Challenge Problem. Assume that the public in the small country of Sylvania does not hold any cash. Commercial banks, however, hold 10 percent of their checking deposits as excess reserves, regardless of the interest rate. In the questions that follow, the "money multiplier" is given by 1/ (RR+ ER), where RR = the percentage of deposits that banks are required to keep as reserves ER = the percentage of deposits that banks voluntarily hold as excess reserves Consider the balance sheet of one of several identical banks Assets Liabilities and Net Worth Reserves 600 Checking Deposits 2,400 Loans 1,800 Net Worth Total Assets 2,400 Liabilities and Net Worth 2,400
What is the maximum amount of money created from a $3 million deposit in the banking system if the required reserve ratio is 0.05? $0.15 million O $30 million $60 million $31.58 million
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Assume that the reserve ratio is 23 percent and banks in the system are loaning out all their excess reserve. If people collectively deposit mil. $200 million to their checking accounts, then the lending ability of the banking system will increase by $ Round to the nearest million. For example, if your answer is $1234.56 million, then enter "1235" in the box. Margin of error: +/- 10.
Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 50Deposits 205Loans 160 Securities 54Other $X Using the balance sheet above, find the level of excess reserves this bank is holding if the required reserve ratio = 10%(Give answers to 2 decimal places as needed)
A bank has $400 million in demand deposits and desires a 20 percent reserve ratio. How much will it hold as reserves? O a. $200 million O b. $120 million O c. $80 million O d. $500 million
Assume that banks holds no excess reserves and the public holds no currency: A. If a bank receives a deposit inflow of $100,000 explain (using t-accounts) what happens to this bank and one additional round in the deposit creation process assuming the reserve requirement is 8%. B. How much do deposits and loans change for the banking system when the process is completed? Show computation and the entire banking system's final T-account. C. Suppose the Central Bank sells $5 billion to ABC Bank. Determine what happens to checkable deposits of the entire banking system after the sale and completion of the multiple deposit creation process. Determine the change in checkable deposit in the banking system and show the T-account of the banking system.
Q2) Suppose $150 of currency is in circulation. What is the banks’ impact on money supply?Calculate the money supply in case of Fractional reserve banking system. Pretend the Reserve Ratio is by 2.5%. 1. Borrowers first withdrew the loan from 1st National Bank and deposited it in 2nd National Bank. 2. Borrowers Took The Loan from 2nd National Bank and Deposited it in 3rd National Bank 3. Then Borrowers withdrew finally the loan from 3rd National Bank and deposited it in 4th National Bank. Questions: A. Open a T Account for each Bank with the previous situations. B. Show the Impact on money supply (How much the $150 of reserves had generated?)
D1. Please redraw the balanced T-account.
Assume that Bank M is the only commercial bank in the country with zero excess reserve and its legal cash requirement is 12%. Suppose that a customer, Mr. S, deposits RM5000 in the Bank M. a) Construct a balance sheet for Bank M b) Calculate the total deposits. c) Calculate the total reserves d) Calculate the total loans created
3. Suppose you dopiest SR 5000 in currency into your checking account at a branch of Al-Rajhi Bank, which we will assume that the required reserve ration is %10. a. Use a T-account to show the initial effect of this transaction on Al-Rajhi's balance sheet. b. Suppose that Al-Rajhi Bank makes the maximum loan it can from the fund you deposited. Use a T-account to show the the initial effect of this transaction on Al- Rajhi's balance sheet. Also include in this T-account the transaction from part (a). c. Now suppose that whoever took out the loan in part (b) writes a check for this amount and that person receiving the check deposit in Alinma Bank. Use a T-account to show the the initial effect of this transaction on Alinma's balance sheet.

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Suppose the required reserve ratio is .15 and individuals hold no cash. Total bank deposits are $100 million and the banks hold $20 million in reserves. How much more money can the bank create if it does not hold excess reserves? A. $33 million B. $66 million C. $100 million D. $667 million