Homework Answers
| Asset | Liabilities |
|
Reserves 3 million Loans 3 million Cash 2 million Securities 2 million |
Checking Account deposit 10 million |
Reserves = checking account - Loans - Cash - Securities
Reserves = 10 million - 3 million - 2 million - 2 million
Reserves = 3 million.
Reserve ratio = 0.09
Required Reserves = Reserves ratio * Checking account deposit.
Required Reserves = (0.09) (10 million)
Required Reserves = 0.9 million
Excess reserves = Reserves - Required Reserves
Excess reserves = 3 million - 0.9 million
Excess reserves = 2.1 million
Answer: 2.1 million
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a. Show the balance sheet of the Federal Reserve
and National Bank if National Bank converts all excess reserves to
loans, but borrowers return only 50 percent of these funds to
National Bank as transaction deposits.
b. Show the balance sheet of the Federal Reserve
and National Bank if...
This is for Required B
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