8 Question (3 points) See p :543 1st attempt Q See Hint Use the balance sheet fo

Question

8 Question (3 points) See p :543 1st attempt Q See Hint Use the balance sheet for the Bank of the Economists (where all economists go to bank) to answer the questions below. Assume the required reserve ratio is 20%. Assets Liabilities and net worth $125,000 Liabilities Reserves Loans Treasury securities $100,000 375,000Checking deposits $500,000 $100,000 Net worth A. What are the Bank of the Economists' required reserves? s B. What are its current excess reserves? (Enter zero if it has no excess reserves) C. What is the $ m amount in additional loans that can the bank can make? (Enter zero if it cannot make any additional loans at

Explanation / Answer

A. required reserve is 20% and as per Balance sheet the reserves are 125000 dollars
therefore, the Bank of Economists' required reserves are ....150000 dollars

B. It has no excess reserves as required reserve is 150000 and its current reserves is 125000. therefore its 0

C. The maximum amount in additional loans that the bank can make is 25000 dollars as it requires 20% extra reserves.

Part 1

M2 is 13700 and the savings deposits and money market mutual funds is 8700, therefore, M1 wil be 5000 billion dollars.

Part 2
There is 13700 billion dollars as deposits and the other deposits amount to 2500, therefore the amount the currency in billion dollars is 16200

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