The commercial banks in Fundland have
Reserves $500 million
Loans $3,500 million
Deposits $4,000 million
Total assets $5,000 million
The banks hold no excess reserves.
a)Calculate the banks' desired reserve ratio.
b)An immigrant arrives in Fundland with $10 million, which she deposits in a bank. How much does the immigrant's bank lend initially?

Question

The commercial banks in Fundland have
Reserves	 $500 million
Loans	$3,500 million
Deposits	$4,000 million
Total assets	$5,000 million
The banks hold no excess reserves.
a)Calculate the banks' desired reserve ratio.
b)An immigrant arrives in Fundland with $10 million, which she deposits in a bank. How much does the immigrant's bank lend initially?

Quizplus · Accepted Answer

The Answer of The commercial banks in Fundland have
Reserves	 $500 million
Loans	$3,500 million
Deposits	$4,000 million
Total assets	$5,000 million
The banks hold no excess reserves.
a)Calculate the banks' desired reserve ratio.
b)An immigrant arrives in Fundland with $10 million, which she deposits in a bank. How much does the immigrant's bank lend initially?

The Commercial Banks in Fundland Have