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Assets:
Vault Cash: $20,000
Deposits at Fed $30,000
Securities $45,000
Loans $120,000

Liabilities:
Checking Deposits $200,000
Net Worth $15,000

Suppose that the reserve requirement is 10 percent and the bank's balance sheet looks like the example above.

a. What are the required reserves? Does the bank have any excess reserves?
b. What is the maximum loan that the band could extend?
c. How would the bank's balance sheet would be altered if it extended this loan?
d. Suppose the required reserves were 20 percent. If this were the case. would the bank be in a position to extend any additional loans?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9482352

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