1. 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
$_____________________.