Working through a change in the reserve requirement Assume that the following table portrays the balance sheet of First Eastern bank. Assets Liabilities and Net Worth Vault Cash $150,000 Deposits $900,000 Deposits at Fed $250,000 Loans $500,000 Total $900,000 Total $900,000 First Eastern's bank reserves are equal to $_. If the Federal Reserve sets the required reserve ratio to 0.20, First Eastern's required reserves would be $_. Therefore, it would have $_ in excess reserves. If First Eastern loaned all of its excess reserves, the maximum amount by which the money supply could subsequently increase is $_
Working through a change in the reserve requirement Assume that the following table portrays the balance sheet of First Eastern bank. Assets Liabilities and Net Worth Vault Cash $150,000 Deposits $900,000 Deposits at Fed $250,000 Loans $500,000 Total $900,000 Total $900,000 First Eastern's bank reserves are equal to $_. If the Federal Reserve sets the required reserve ratio to 0.20, First Eastern's required reserves would be $_. Therefore, it would have $_ in excess reserves. If First Eastern loaned all of its excess reserves, the maximum amount by which the money supply could subsequently increase is $_
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Working through a change in the reserve requirement
Assume that the following table portrays the balance sheet of First Eastern bank.
|
Assets
|
|
Liabilities and Net Worth
|
|
|
|---|---|---|---|---|
| Vault Cash | $150,000 | Deposits | $900,000 | |
| Deposits at Fed | $250,000 | |||
| Loans | $500,000 | |||
| Total | $900,000 | Total | $900,000 |
First Eastern's bank reserves are equal to $_.
If the Federal Reserve sets the required reserve ratio to 0.20, First Eastern's required reserves would be $_.
Therefore, it would have $_ in excess reserves.
If First Eastern loaned all of its excess reserves, the maximum amount by which the money supply could subsequently increase is $_
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