The table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target reserve ratio is 10%. Reserves Loans Assets Securities Fixed assets Total $120,000 $ 680,000 250,000 350,000 $1,400,000 (1) 90,000 $ 710,000 250,000 350,000 1,430,000 (2) Liabilities / Equity Demand deposits Shareholders equity Total $900,000 $ 500,000 $1,400,000 a. This bank is over-reserved by $30,000 b. Suppose that a loan, in the amount of the excess reserves found in part (a), is made to Sats Mundin. Show the resulting balance sheet in columns (1) in the table above. loan for the amount in your answer in c. Suppose that Sats immediately spends all of his loan by writing a cheque to his psychologist, Freda Freud. She deposits it in her account, which happens to also be at the Maple Leafs Bank. The bank is now over-reserved by $30,000. d. Suppose, instead, that the bank makes Bank. Show the resulting balan (1) $ (2)
The table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target reserve ratio is 10%. Reserves Loans Assets Securities Fixed assets Total $120,000 $ 680,000 250,000 350,000 $1,400,000 (1) 90,000 $ 710,000 250,000 350,000 1,430,000 (2) Liabilities / Equity Demand deposits Shareholders equity Total $900,000 $ 500,000 $1,400,000 a. This bank is over-reserved by $30,000 b. Suppose that a loan, in the amount of the excess reserves found in part (a), is made to Sats Mundin. Show the resulting balance sheet in columns (1) in the table above. loan for the amount in your answer in c. Suppose that Sats immediately spends all of his loan by writing a cheque to his psychologist, Freda Freud. She deposits it in her account, which happens to also be at the Maple Leafs Bank. The bank is now over-reserved by $30,000. d. Suppose, instead, that the bank makes Bank. Show the resulting balan (1) $ (2)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please answer the blank column.
![The table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target
reserve ratio is 10%.
Mc
Assets
Reserves
Loans
Securities.
Fixed assets
Total
Graw
$120,000 $
680,000
250,000
350,000
$1,400,000
(1)
90,000 $
710,000
250,000
350,000
1,430,000
Reserves
(2)
$
a. This bank is over-reserved
by $30,000.
b. Suppose that a loan, in the amount of the excess reserves found in part (a), is made to Sats Mundin. Show the resulting balance
sheet in columns (1) in the table above.
< Prev
Demand deposits
Shareholders' equity
Total
Search
Liabilities / Equity
c. Suppose that Sats immediately spends all of his loan by writing a cheque to his psychologist, Freda Freud. She deposits it in her
account, which happens to also be at the Maple Leafs Bank.
The bank is now over-reserved by $30,000
d. Suppose, instead, that the bank makes a loan for the amount in your answer in part (a), which then clears against the Maple Leafs
Bank. Show the resulting balance sheet in columns (2) in the table above.
e. The Bank now has excess reserves of $30,000
Suppose that there are a total of 9 other banks in the economy and that the balance sheet for the whole banking system is presented
in the table below. Assume that each of the other banks also has a target reserve ratio of 10%.
Assets
(1 all)
Liabilities / Equity
Demand deposits
$1,200,000
11 of 14
www
www
www
SAMSUNG
$900,000 $
500,000
Next >
$1,400,000
$9,000,000
(1 all)
$1
(1)
$
(2)
C](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F75a70b04-b0fa-40b4-b513-0b9d204db5e2%2F41aac59d-adbf-4d0e-86da-6129581bbbd8%2F0rlbnav_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target
reserve ratio is 10%.
Mc
Assets
Reserves
Loans
Securities.
Fixed assets
Total
Graw
$120,000 $
680,000
250,000
350,000
$1,400,000
(1)
90,000 $
710,000
250,000
350,000
1,430,000
Reserves
(2)
$
a. This bank is over-reserved
by $30,000.
b. Suppose that a loan, in the amount of the excess reserves found in part (a), is made to Sats Mundin. Show the resulting balance
sheet in columns (1) in the table above.
< Prev
Demand deposits
Shareholders' equity
Total
Search
Liabilities / Equity
c. Suppose that Sats immediately spends all of his loan by writing a cheque to his psychologist, Freda Freud. She deposits it in her
account, which happens to also be at the Maple Leafs Bank.
The bank is now over-reserved by $30,000
d. Suppose, instead, that the bank makes a loan for the amount in your answer in part (a), which then clears against the Maple Leafs
Bank. Show the resulting balance sheet in columns (2) in the table above.
e. The Bank now has excess reserves of $30,000
Suppose that there are a total of 9 other banks in the economy and that the balance sheet for the whole banking system is presented
in the table below. Assume that each of the other banks also has a target reserve ratio of 10%.
Assets
(1 all)
Liabilities / Equity
Demand deposits
$1,200,000
11 of 14
www
www
www
SAMSUNG
$900,000 $
500,000
Next >
$1,400,000
$9,000,000
(1 all)
$1
(1)
$
(2)
C
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