BE512-850 Fall 2017 Simplified Bank Balance Sheet Assets Total Demand Deposits $

Question

BE512-850 Fall 2017 Simplified Bank Balance Sheet Assets Total Demand Deposits $10,000 Required Excess 0 $ 8.000 Total Assets and Net Worth $10.000 a Fill in the Balance Sheet above b What is the required reserve ratio (R)? c. Ifthis bank received $10,000 in new deposits, its required reserves would become Construct a new balance sheet for part above. e. If all banks had the same required reserve ratio, what would the money multiplier (MS) be? L Therefore, this additional $10,000 in new deposits would expand new loans and investments in the banking system, by

Explanation / Answer

b. The required reserve in the balance sheet as = 10,000 - 8000 (i.e. 8,000 in asset side and 10,000 in liability side)

so, Required reserve = 2000.

c. The required reserve would become 2000 + 10,000 = 12,000.

d. The balance sheet would be as:

e. The money multiplier be 100%.

f. It should be increase by 10,000.

Assets Liability Loan                                  8000 Demand Deposit                   10,000 Required access               2000 Total asset                       10,000 Total liability                            10,000

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.