What is the maximum amount of new loans that this bank can make? Show in columns 3 and 3' how the bank's balance sheet will appear after the bank has lent this additional amount Add values into the gray shaded cells of the table. By how much has the money supply changed?
What is the maximum amount of new loans that this bank can make? Show in columns 3 and 3' how the bank's balance sheet will appear after the bank has lent this additional amount Add values into the gray shaded cells of the table. By how much has the money supply changed?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:The following balance sheet is for Big Bucks Bank. The reserve ratio is 20 percent.
Assets
(1)
(2)
Liabilities and net worth
(1)
(2)
Reserves
$ 22,000 $ 22,000$ 22,000 Checkable deposits
$ 100,000
$102,000 $ 102.000
Socurities
38,000
38,000
38,000
Loans
40,000
42.000
42,000
c How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the
bank? Show the new balance sheet in columns 2 and 2' by Inserting the values into the gray shaded cells.
d. Using the original figures, revisit questions a, b, and c based on the assumption that the reserve ratio is 15 percent.
Assets
(3)
(4)
Llabilities and net worth
6,
(4)
Reserves
$ 22,000
Checkable deponts
$ 100,000
Securities
38,000
Loan
40,000
What is the maximum amount of new loans that this bank can make?
$1
Show in columns 3 and 3' how the bank's balance sheet will appear after the bank has lent this additional amount. Add values into the
gray shaded cells of the table.
By how much has the money supply changed?
How will the bank's belance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the
bank? Show this new balance sheet in columns 4 and 4. Add values into the gray shaded cells of the table.
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