Assets Liabilities Vault Cash $ 200 Million Checking Deposits ? Deposits with th

ID: 2654326 • Letter: A

Question

Assets Liabilities

Vault Cash $ 200 Million Checking Deposits ?

Deposits with the Fed $ 1.8 Billion Savings Deposits $8 Billion

Loans $ 8Billion

T-Bonds $ 4 Billion Bank Capital

What must be the total amount of checking deposits?

What is the amount of the bank’s capital?

Excess reserves = Vault cash + Deposits with fed - Required reserves

1,5Billion = 0.2 Billion + 1.8 Bqillion - Required reeserves

Required reserves = 0.5 Billion

Money supply = Reserves * Money multiplier

= $ 0.5 Billion * 1/10%

= $ 5 Billion

Therefore, checking deposits are $ 5 Billion

Calculate bank's capital:

Total assets = Total liabilities + Bank's capital

Bank's capital = Total assets - Total liabilities

= ($0.2 Billion + 1.8 Billion + $ 8 Billion + $ 4 Billion) - ($ 8 Billion + $ 5 Billion)

= $ 1 Billion

Therefore, bank's capital is $ 1 Billion.

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