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 $200 1,800 1,300 300 $3,600 $ (1) $ (2) Total $3,000 600 $3,600 $ (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 S 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 $200 1,800 1,300 300 $3,600 $ (1) $ (2) Total $3,000 600 $3,600 $ (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 S 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)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
$200
1,800
1,300
300
$3,600
$
(1)
$
(2)
Total
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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 $
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.
SAMSUNG
$3,000
600
$3,600
Net>
Next
(1)
$
(2)
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