Question

All nationally chartered banks are required to purchase bonds in their district's Fed bank. True False QUESTION 6 Use the following to answer the next three questions. Delta Bank currently has $450 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 10 percent of transaction deposits. The Federal Reserve is considering reducing the reserve requirement to 6 percent. Delta withdraws all excess reserves and gives them out as loans. Delta's customers prefer to hold 20% of their funds outside of the bank. What is Delta's loan account balance prior to the change in the reserve requirement? 423 million 27 million 45 million 405 million QUESTION 7

Answer 1

Delta Bank currently has transaction deposits on its balance sheet = $ 450 million

Current Reserve Requiremnet = 10%

Current Reserve amount = $450 million*10%

= $ 45 million

As, Transaction Deposits = Reserves + Loan Amount

$ 450 million = $45 million + Loan Amount

Loan Amount = $ 405 million

hence, Option D