Bank Reserves- Suppose that the reserve ratio is -25- and that a bank.docx
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Bank ReservesSuppose that the reserve ratio is .25, and that a ban.docx
Bank Reserves- Suppose that the reserve ratio is -25- and that a bank.docx
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Bank Reserves; Suppose that the reserve ratio is .25, and that a bank has actual reserves of $15,000, loans of $40,000, and demand deposits of $50,000. A. Excess reserves are $____________________. B. This bank, being a single bank in a multibank system, can safely lend $____________________. C. The multibank system can safely lend $__________________. D. It is possible for the monetary base to increase by a total of $___________________. Assume now that the Fed lowers the reserve ratio to .20: E. This bank, being a single bank in a multibank system, can now safely lend $___________. F. The multibank system can safely lend $____________________. G. It is now possible for the monetary base to increase by a total of $________________________. H. The increase/decrease in the potential money supply because of the decrease in the required reserve ratio is $_____________________. Solution Answer Bank Reserves; Suppose that the reserve ratio is .25, and that a bank has actual reserves of $15,000, loans of $40,000, and demand deposits of $50,000. A. Excess reserves are $________$2500____________. B. This bank, being a single bank in a multibank system, can safely lend $_______40000____________. C. The multibank system can safely lend $___________0_______. D. It is possible for the monetary base to increase by a total of $_________37500__________. Assume now that the Fed lowers the reserve ratio to .20: E. This bank, being a single bank in a multibank system, can now safely lend $____5000_______. F. The multibank system can safely lend $_____________42500_______. G. It is now possible for the monetary base to increase by a total of $_________40000_______________. H. The increase/decrease in the potential money supply because of the decrease in the required reserve ratio is $_________2500____________. .
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Bank Reserves- Suppose that the reserve ratio is -25- and that a bank.docx
- Bank Reserves; Suppose that the reserve ratio is .25, and that a bank has actual reserves of $15,000, loans of $40,000, and demand deposits of $50,000. A. Excess reserves are $____________________. B. This bank, being a single bank in a multibank system, can safely lend $____________________. C. The multibank system can safely lend $__________________. D. It is possible for the monetary base to increase by a total of $___________________. Assume now that the Fed lowers the reserve ratio to .20: E. This bank, being a single bank in a multibank system, can now safely lend $___________. F. The multibank system can safely lend $____________________. G. It is now possible for the monetary base to increase by a total of $________________________. H. The increase/decrease in the potential money supply because of the decrease in the required reserve ratio is $_____________________. Solution Answer Bank Reserves; Suppose that the reserve ratio is .25, and that a bank has actual reserves of $15,000, loans of $40,000, and demand deposits of $50,000. A. Excess reserves are $________$2500____________. B. This bank, being a single bank in a multibank system, can safely lend $_______40000____________. C. The multibank system can safely lend $___________0_______. D. It is possible for the monetary base to increase by a total of $_________37500__________. Assume now that the Fed lowers the reserve ratio to .20: E. This bank, being a single bank in a multibank system, can now safely lend $____5000_______. F. The multibank system can safely lend $_____________42500_______. G. It is now possible for the monetary base to increase by a total of $_________40000_______________. H. The increase/decrease in the potential money supply because of the decrease in the required reserve ratio is $_________2500____________.