The liquidity ratio is 25%. Pound Bank has £20,000 in deposits and £12,000 in liquid assets. Assume all other commercial banks are loaned up.
(a) What is the value of this bank's excess liquidity?
(b) What is the value of the additional loans that can be made by the commercial banking system?
(c) What is the money multiplier?
(d) By how much will total deposits expand if this bank lends all its excess reserves and there is no leakage from the banking system?

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The Answer of The liquidity ratio is 25%. Pound Bank has £20,000 in deposits and £12,000 in liquid assets. Assume all other commercial banks are loaned up.
(a) What is the value of this bank's excess liquidity?
(b) What is the value of the additional loans that can be made by the commercial banking system?
(c) What is the money multiplier?
(d) By how much will total deposits expand if this bank lends all its excess reserves and there is no leakage from the banking system?

The Liquidity Ratio Is 25