Suppose the simplified consolidated balance sheet shown below is for the entire commercial banking system and that all figures are inbillions of dollars. The reserve ratio is 25 percent.AssetsReservesSecuritiesLoans$15248100(a)$(b)Instructions: Enter your answers as a whole number.billionLiabilities and net worthCheckable depositsa. What is the amount of excess reserves in this commercial banking system?$billionWhat is the maximum amount the banking system might lend?$billion$1'200(a)Show in columns 1(a) and 1'(a) how the consolidated balance sheet would look after this amount has been lent. Enter these new valuesin the gray shaded cells of the given table.What is the size of the monetary multiplier?(b)b. Using the original figures, answer the questions in part a assuming the reserve ratio is 20 percent. What is the amount of excessreserves in this commercial banking system? What is the maximum amount the banking system might lend?$billionShow in columns 1(b) and 1'(b) how the consolidated balance sheet would look after this amount has beenlent. 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 therequired reserve ratio is 20 percent rather than 25 percent?It can lend $billion (Click to select) ✓

AssetsLiabilities and net worth(a)(b)(a)(b)11'Reserves$52$$Checkable…

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 25 percent. Assets Reserves. Securities Loans $ 1 52 48 100 (a) (b) Liabilities and net worth Checkable deposits $ 1' 200 (a) (b)

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 25 percent. Assets Reserves. Securities Loans $ 1 52 48 100 (a) (b) Liabilities and net worth Checkable deposits $ 1' 200 (a) (b)

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter14: Banking And The Money Supply

Section: Chapter Questions

Problem 2.3P

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