Answer the next questions based on the following balance sheet for a chartered bank.Assume the desired reserve ratio is 33%. (a) What is the amount of excess reserves?
(b) By what amount can this bank safely expand its loans?
(c) By expanding its loans by the amount in part (b), what would its demand deposits equal (if all loans were made to customers holding demand deposits)?
(d) If cheques clear against the bank equal to the amount loaned in (b), how much would remain in reserves and in demand deposits?

Question

Answer the next questions based on the following balance sheet for a chartered bank.Assume the desired reserve ratio is 33%.  (a) What is the amount of excess reserves?
(b) By what amount can this bank safely expand its loans?
(c) By expanding its loans by the amount in part (b), what would its demand deposits equal (if all loans were made to customers holding demand deposits)?
(d) If cheques clear against the bank equal to the amount loaned in (b), how much would remain in reserves and in demand deposits?

Quizplus · Accepted Answer

The Answer of Answer the next questions based on the following balance sheet for a chartered bank.Assume the desired reserve ratio is 33%.  (a) What is the amount of excess reserves?
(b) By what amount can this bank safely expand its loans?
(c) By expanding its loans by the amount in part (b), what would its demand deposits equal (if all loans were made to customers holding demand deposits)?
(d) If cheques clear against the bank equal to the amount loaned in (b), how much would remain in reserves and in demand deposits?

Answer the Next Questions Based on the Following Balance Sheet