The table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target reserve ratio is 10%. Reserves Loans Assets Securities Fixed assets Total (1) $120,000 $1 680,000 250,000 350,000 $1,400,000 Reserves 710,000 250,000 350,000 $ (2) $1,200,000 $ < Prev Demand deposits Shareholders' equity Total a. This bank is over-reserved by $30,000 b. Suppose that a loan, in the amount of the excess reserves found in part (a), is made to Sats Mundin. Show the resulting balance sheet in columns (1) in the table above. Search Liabilities / Equity c. Suppose that Sats immediately spends all of his loan by writing a cheque to his psychologist, Freda Freud. She deposits it in her account, which happens to also be at the Maple Leafs Bank. The bank is now over-reserved by $ d. Suppose, instead, that the bank makes a loan for the amount in your answer in part (a). which then clears against the Maple Leafs Bank. Show the resulting balance sheet in columns (2) in the table above. e. The Bank now has excess reserves of $ Suppose that there are a total of 9 other banks in the economy and that the balance sheet for the whole banking system is presented in the table below. Assume that each of the other banks also has a target reserve ratio of 10%. Assets (1 all) Liabilities/ Equity Demand deposits m 11 of 14 ⠀ $900,000 $ 500,000 $1,400,000 $9,000,000 Next > (1) (1 all) 500,00 $ (2) 900.00 500,000 1,400,000
The table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target reserve ratio is 10%. Reserves Loans Assets Securities Fixed assets Total (1) $120,000 $1 680,000 250,000 350,000 $1,400,000 Reserves 710,000 250,000 350,000 $ (2) $1,200,000 $ < Prev Demand deposits Shareholders' equity Total a. This bank is over-reserved by $30,000 b. Suppose that a loan, in the amount of the excess reserves found in part (a), is made to Sats Mundin. Show the resulting balance sheet in columns (1) in the table above. Search Liabilities / Equity c. Suppose that Sats immediately spends all of his loan by writing a cheque to his psychologist, Freda Freud. She deposits it in her account, which happens to also be at the Maple Leafs Bank. The bank is now over-reserved by $ d. Suppose, instead, that the bank makes a loan for the amount in your answer in part (a). which then clears against the Maple Leafs Bank. Show the resulting balance sheet in columns (2) in the table above. e. The Bank now has excess reserves of $ Suppose that there are a total of 9 other banks in the economy and that the balance sheet for the whole banking system is presented in the table below. Assume that each of the other banks also has a target reserve ratio of 10%. Assets (1 all) Liabilities/ Equity Demand deposits m 11 of 14 ⠀ $900,000 $ 500,000 $1,400,000 $9,000,000 Next > (1) (1 all) 500,00 $ (2) 900.00 500,000 1,400,000
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter28: Monetary Policy And Bank Regulation
Section: Chapter Questions
Problem 14RQ: In a program of deposit insurance as it is operated in the United States, what is being insured and...
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Transcribed Image Text:#3 (CH 7.8.9)
20100
The table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target
reserve ratio is 10%.
Reserves
Loans
Assets
Securities
Fixed assets
Total
$120,000 $
680,000
250,000
350,000
$1,400,000
(1)
Reserves
710,000
250,000
350,000
$
(2)
$1,200,000 $
m
Saved
Liabilities / Equity
Demand deposits
Shareholders' equity VINNI
a. This bank is over-reserved
by $30,000
b. Suppose that a loan, in the amount of the excess reserves found in part (a), is made to Sats Mundin. Show the resulting balance
sheet in columns (1) in the table above.
< Prev
Total
O Search
c. Suppose that Sats immediately spends all of his loan by writing a cheque to his psychologist, Freda Freud. She deposits it in her
account, which happens to also be at the Maple Leafs Bank.
The bank is now over-reserved by $
d. Suppose, instead, that the bank makes a loan for the amount in your answer in part (a), which then clears against the Maple Leafs
Bank. Show the resulting balance sheet in columns (2) in the table above.
e. The Bank now has excess reserves of $
Suppose that there are a total of 9 other banks in the economy and that the balance sheet for the whole banking system is presented
in the table below. Assume that each of the other banks also has a target reserve ratio of 10%.
Assets
(1 all)
Liabilities / Equity N
Demand deposits
11 of 14
www
SAMSUNG
$900,000 $
500,000
$1,400,000
$9,000,000
Next >
$
(1)
(1 all)
500,00
$
Help
(2)
900,00
500,000
1,400,000
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