. The following is the balance sheet of the Bank of Your Class Assets whad the b
ID: 1111975 • Letter: #
Question
. The following is the balance sheet of the Bank of Your Class Assets whad the barhsow Cash Deposits with the Fed 10,000 Loans Liabilities wh iht bonh 12,000 Deposits $ 240,000 35,000 ER AR-RR 278,000 5, Capital $300,000 Total 60,000 Total 300,000 11.5 Assume the RRR is 8% Calculate the following for the Bank of Your Class. RR = , 240,000 x .01:, 19,100 AR 2,00010,000 22,000 ER 22,000 19,200 *2,900 NL= '2,800 x 11 5 : s35, 000 If the new loan created by the Bank of Your Class is being deposited back with this bank and there is no money drain, what would be the excess reserves of this bank after the deposit posit? has been made and how much new loan can this bank create after the de 240,000 35,000-275, 000Explanation / Answer
1.
Required reserve = required reserve ratio*deposits = 8%*240000 = $19200
Actual Reserve = cash + deposits with the Federal Reserve = 12000 + 10000 = $22000
Excess Reserve = Actual reserve – Required reserve = 22000 – 19200 = $2800
New loans =$2800 (the excess reserve can be issued at new loans)
2.
The new loan of $2800 is deposited back to the bank.
Excess Reserve = New deposit - required reserve on the new deposit
Excess Reserve = 2800 – 8%*2800 = $2576
A new loan of $2576 can now be created by the bank.
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