Deposit multiplier homework Fill in the blanks (banks 1-20) for the omitted bank
ID: 1110289 • Letter: D
Question
Deposit multiplier homework
Fill in the blanks (banks 1-20) for the omitted banks in the following table. Assume a 15% reserve requirement against deposits. You should also fill out the last 2 lines (all other banks and total of all banks). Look at table 15.3 in your textbook for a similar example.
Banks
Deposits
Excess Reserves
Req. Reserves
Bank 1
----------
10,000
------------
Bank 2
10,000
8,500
-------------
Bank3
Bank 4
Bank 5
Bank 6
Bank 7
Bank 8
Bank 9
Bank 10
Bank 11
2,315
1,968
347
Bank 12
Bank 13
Bank 14
Bank 15
Bank 16
Bank 17
Bank 18
Bank 19
Bank 20
537
457
80
All other banks
Total of all banks
___________________________________________________________________________
Banks
Deposits
Excess Reserves
Req. Reserves
Bank 1
----------
10,000
------------
Bank 2
10,000
8,500
-------------
Bank3
Bank 4
Bank 5
Bank 6
Bank 7
Bank 8
Bank 9
Bank 10
Bank 11
2,315
1,968
347
Bank 12
Bank 13
Bank 14
Bank 15
Bank 16
Bank 17
Bank 18
Bank 19
Bank 20
537
457
80
All other banks
Total of all banks
Explanation / Answer
Required reserves = 15% x Deposits
Excess reserves = Deposits - Required reserves
Deposits (nth bank) = Excess reserves ((n-1) bank)
Deposits for all other banks = Excess reserves (20th bank)/required reserve ratio
There would be no excess reserves left in the banking system once all excess reserves have been loaned out.
Banks Deposits Excess Reserves Required Reserves Bank 1 10000 Bank 2 10000.00 8500.00 1500.00 Bank 3 8500.00 7225.00 1275.00 Bank 4 7225.00 6141.25 1083.75 Bank 5 6141.25 5220.06 921.19 Bank 6 5220.06 4437.05 783.01 Bank 7 4437.05 3771.50 665.56 Bank 8 3771.50 3205.77 565.72 Bank 9 3205.77 2724.91 480.87 Bank 10 2724.91 2316.17 408.74 Bank 11 2316.17 1968.74 347.43 Bank 12 1968.74 1673.43 295.31 Bank 13 1673.43 1422.42 251.01 Bank 14 1422.42 1209.05 213.36 Bank 15 1209.05 1027.70 181.36 Bank 16 1027.70 873.54 154.15 Bank 17 873.54 742.51 131.03 Bank 18 742.51 631.13 111.38 Bank 19 631.13 536.46 94.67 Bank 20 536.46 455.99 80.47 All other banks 3039.96 0.00 455.99 Total of all banks 66666.67 0 10000.00Related Questions
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