The commercial banks in Fundland have
The banks hold no excess reserves.
$\begin{array}{ll}
\text { Reserves } & \$ 500 \text { million } \
\text { Loans } & \$ 3,500 \text { million } \
\text { Deposits } & \$ 4,000 \text { million }\
\text { Total assets }& \$ 5,000 \text { million } \
\end{array}$
a) Calculate the banksʹ desired reserve ratio.
b) An immigrant arrives in Fundland with $10 million, which she deposits in a bank. How much does the immigrantʹs bank lend initially?

Question

The commercial banks in Fundland have
The banks hold no excess reserves.
 $\begin{array}{ll}
\text { Reserves } & \$ 500 \text { million } \
\text { Loans } & \$ 3,500 \text { million } \
\text { Deposits } & \$ 4,000 \text { million }\
\text { Total assets }& \$ 5,000 \text { million } \
\end{array}$ 
a) Calculate the banksʹ desired reserve ratio.
b) An immigrant arrives in Fundland with $10 million, which she deposits in a bank. How much does the immigrantʹs bank lend initially?

Quizplus · Accepted Answer

The Answer of The commercial banks in Fundland have
The banks hold no excess reserves.
 $\begin{array}{ll}
\text { Reserves } & \$ 500 \text { million } \
\text { Loans } & \$ 3,500 \text { million } \
\text { Deposits } & \$ 4,000 \text { million }\
\text { Total assets }& \$ 5,000 \text { million } \
\end{array}$ 
a) Calculate the banksʹ desired reserve ratio.
b) An immigrant arrives in Fundland with $10 million, which she deposits in a bank. How much does the immigrantʹs bank lend initially?

The Commercial Banks in Fundland Have the Banks Hold No

The Commercial Banks in Fundland Have
the Banks Hold No