The questions on this homework deal with an economy called Economica. This econo
ID: 1208618 • Letter: T
Question
The questions on this homework deal with an economy called Economica. This economy contains a total of two banks; I've included partial balance sheet information for each below. To avoid each question becoming huge, I won't repeat this information for future questions.
Bank One:
$1,500 cash within the bank
$3,000 Deposit in the Fed
$6,000 equity (capital)
$12,000 saving deposits
$16,000 checking deposits (DD)
Bank Two:
$2,000 cash within the bank
$3,500 Deposit in the Fed
$8,000 equity (capital)
$15,000 savings deposits
$20,000 checking deposits (DD)
Residents in this economy hold $6,000 in cash. The reserve requirement ratio is the same as we've used on all graded assignments.
Calculate Bank Two's required reserves.. Carefully follow all numeric instructions.
Explanation / Answer
Total asset that bank is holding = Cash with in bank + Deposit in fed
Total liability = Equity + Savings deposit + Checking Deposit
Total deposit is = 15000 + 20000 =35000
That means total asset is 5500
total liability is 43000
Required reserve ratio is the % of deposit which abank holds as reserve. Now total liability x required reserve ratio = amount of required reserve.
So put the ratio number and you will get the amount of required reserve.
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