with explanation PLEASE!! The Key Bank of Potsdam Assets Liabilities Reserves $7
ID: 1180964 • Letter: W
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with explanation PLEASE!!
The Key Bank of Potsdam Assets Liabilities Reserves $750,000 Deposits $3,810,000 Loans $3,060,000 Refer to Table 29-4. If the bank faces a reserve requirement of 15 %, then the bank is in a position to make a new loan of Refer to Table 29-4. If the bank faces a reserve requirement of 18 %, then the bank has excess reserves of Refer to Table 29-4. Suppose the bank faces a reserve requirement of 15 %. Starting from the situation as depicted by the T-account, a customer deposits an additional $25,000 into his account at the bank. If the bank takes no other action it will have $174,750 in excess reserves. have 0 in excess reserves. need to raise an additional $3,750 of reserves to meet the reserve requirement None of the above is correct. Refer to Table 29-4. If the bank faces a reserve requirement of 25 %, then it has $202,500 of excess reserves. needs $202,500 more reserves to meet its reserve requirements. needs/$765,000 more reserves to meet its reserve requirements. just meets its reserve requirement. Refer to Table 29-4. If the Key Bank of Potsdam is holding $45,150 in excess reserves, then the reserve requirement with which it must comply is If the reserve ratio is 8 %, then S81,250,000 of new money can be generated by of reserves If velocity = 8, the price level = 135, and the real value of output is $75,000, then the quantity of money is of moneyExplanation / Answer
2. Required Reserves = m x Demand Deposits in which m is the required reserve ratio.
Required Reserves = 15% of $3810000 =$571500
The bank has reserves of $750,000 . We solve for excess reserves using the formula:
Excess Reserves = Reserves - Required Reserves.
Excess Reserves = $750,000 - $571500 = $178500
Bank is in position to make new loan of $178500
3. Required Reserves = m x Demand Deposits in which m is the required reserve ratio.
Required Reserves = 18% of $3810000 =$685800
The bank has reserves of $750,000. We solve for excess reserves using the formula:
Excess Reserves = Reserves - Required Reserves.
Excess Reserves = $750,000 - $685800 = $64200
4.Required Reserves = 15% of ($3810000+25000) =$575250
The bank has reserves of $750,000+25000 =$775000. We solve for excess reserves using the formula:
Excess Reserves = Reserves - Required Reserves.
Excess Reserves = $775,000 - $575250 = $199750
d) none of the above is correct
5.Required Reserves = m x Demand Deposits in which m is the required reserve ratio.
Required Reserves = 25% of $3810000 =$952500
The bank has reserves of $750,000.
More reserve needed = $952500-750,000=$202500
b) needs $202500 more reserve to meet requirements
6) Excess Reserves = Reserves - Required Reserves
45150 = 750,000 -Required Reserves
Required reserves = -$704850
reserve requirement = 704850/3810000 =18.50%
7)Required Reserves = 8% of $3810000 =$304800
Excess Reserves = Reserves - Required Reserves
81250000 = Reserves-304800
Reserves = $81,554,800
8)MV = PQ
Where M= the quantity of money in circulation, V = the velocity of money, P = the price level, and Q = real GDP
M*8 = 135*75000
Q of money =$1,265,625
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