PROBLEM 2 . You are given the following balance sheet for the Bank of Arlington:

ID: 1091411 • Letter: P

Question

PROBLEM 2. You are given the following balance sheet for the Bank of Arlington:

A) Suppose that the Bank of Arlington is just meeting is reserve requirement. The required reserve ratio must be ________, and the money multiplier equals _______.

B) To be in a position to make loans, the Bank of Arlington must acquire some

excess / required (choose one) reserves.

C) If the Fed suddenly lowers the required reserve ratio to 20 percent, the Bank of Arlington would (as a result) have required reserves of _______ and excess reserves of ________.

D) With a 20 percent required reserve ratio the Bank of Arlington could make loans totaling __________.

E) Complete the five blanks (a-e) in the table below.

Explanation / Answer

Answers:

A.) 25%, 4

B.) excess

C.) $200,000 and $50,000

D.) $800,000

E.)

a.) $ 20 Billion b.) $40 Billion c.) $ 30 Billion d.) 10 e.) $ 150 Billion

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PROBLEM 2 . You are given the following balance sheet for the Bank of Arlington:

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Explanation / Answer

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