The table below is the combined balance sheet for all the banks in a banking system. Each bank has a target reserve ratio of 5%. Liabilities / Equity Demand deposits Shareholders' equity Assets Reserves Loans Securities Fixed assets Total $350 1,950 1,450 450 $4,200 $ (1) Wwwwww VALMMMM $ (2) Total $3,700 500 $4,200 $ (1) $ a. Fill in the blanks in columns (1) reflecting the complete effect of all excess reserves being loaned out. b. The maximum possible increase in the money supply is $ MIM! c. Returning to the original balance sheet, if the target reserve ratio changes to 10%., the quantity of loans the system be forced to call in will be $ Write in the figures in columns (2) that show this process completed. (2)

The table below is the combined balance sheet for all the banks in a banking system. Each bank has a target reserve ratio of 5%. Liabilities / Equity Demand deposits Shareholders' equity Assets Reserves Loans Securities Fixed assets Total $350 1,950 1,450 450 $4,200 $ (1) Wwwwww VALMMMM $ (2) Total $3,700 500 $4,200 $ (1) $ a. Fill in the blanks in columns (1) reflecting the complete effect of all excess reserves being loaned out. b. The maximum possible increase in the money supply is $ MIM! c. Returning to the original balance sheet, if the target reserve ratio changes to 10%., the quantity of loans the system be forced to call in will be $ Write in the figures in columns (2) that show this process completed. (2)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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