Suppose the simplified consolidated balance sheet shown below is for the entire commercial banking system and that all figures are in billions of dollars. The reserve ratio is 10 percent. Instructions: Enter your answers as a whole number. a. What is the amount of excess reserves in this commercial banking system? $ billion What is the maximum amount the banking system might lend? $ billion Show in columns 1(a) and 1'(a) how the consolidated balance sheet would look after this amount has been lent. Enter these new values in the gray shaded cells of the given table. What is the size of the monetary multiplier? b. Using the original figures, answer the questions in part a assuming the reserve ratio is 5 percent. What is the amount of excess reserves in this commercial banking system? $ billion What is the maximum amount the banking system might lend? $ billion Show in columns 1(b) and 1'(b) how the consolidated balance sheet would look after this amount has been lent. Enter these new values in the gray shaded cells of the given table. What is the monetary multiplier? What is the resulting difference in the amount that the commercial banking system can lend when the required reserve ratio is 5 percent rather than 10 percent? It can lend $ billion .
Suppose the simplified consolidated
Instructions: Enter your answers as a whole number.
a. What is the amount of
$ billion
What is the maximum amount the banking system might lend?
$ billion
Show in columns 1(a) and 1'(a) how the consolidated balance sheet would look after this amount has been lent. Enter these new values in the gray shaded cells of the given table.
What is the size of the monetary multiplier?
b. Using the original figures, answer the questions in part a assuming the reserve ratio is 5 percent. What is the amount of excess reserves in this commercial banking system?
$ billion
What is the maximum amount the banking system might lend?
$ billion
Show in columns 1(b) and 1'(b) how the consolidated balance sheet would look after this amount has been lent. Enter these new values in the gray shaded cells of the given table.
What is the monetary multiplier?
What is the resulting difference in the amount that the commercial banking system can lend when the
It can lend $ billion .
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
