Balance Sheet of The Eubank Assets Liabilities Deposits at The Fed $40,000 Check

Question

Balance Sheet of The Eubank
Assets Liabilities

Deposits at The Fed $40,000 Checkable Deposits $500,000
Cash $10,000 Net Worth /Capital $20,000
Loans $300,000
Securities $150,000
Fed Stock $20,000



Question 1

Refer to Exhibit 0046. If Eubank is holding no excess reserves, what must the required reserve ratio be?

Question 2

Refer to Exhibit 0046. Assume the required reserve ratio calculated in question #1. If Stu Dent deposits $10,000 in cash into his checkable deposit account, how much will Eubank now have in cash on-hand?

Explanation / Answer

1) The ratio should be 2/5 2) The money in hand is 675,000 $

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