Homework Answers
Given,
Deposits = $400 million
Reserves = $30 million
Required reserve ratio = 10% = 0.10
Required reserves = Required reserve ratio * Deposits = 0.10 * $400 million = $40 million
The value of required reserves is higher than the actual reserves. Therefore, it is clear that the commercial bank is facing a required reserves shortage and is excessively loaned up.
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Instructions: Refer to the balance sheet below.
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for the entire commercial banking system and that all figures are
in billions of dollars. The reserve ratio is 25 percent.
Instructions: Refer to the balance sheet below.
Enter your answers as whole numbers.
a. What is the amount of excess reserves in this commercial banking
system?
What is the maximum amount the banking
system might lend?
Show in columns 1(a) and 1'(a) how the
consolidated balance sheet would look...
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