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Bank Balance Sheets HW Answers

Bank Balance Sheets HW Answers. Reserves $90,000 Securities $25,000 Property $215,000 Loans $125,000. Demand Deposits $350,000 Net Worth $105,000. Assets Liabilities. The maximum possible loan is $20,000 $90,000 – ($350,000 x .2) Reserves become $70,000 Loans become $145,000.

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Bank Balance Sheets HW Answers

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  1. Bank Balance Sheets HW Answers

  2. Reserves $90,000 Securities $25,000 Property $215,000 Loans $125,000 Demand Deposits $350,000 Net Worth $105,000 Assets Liabilities The maximum possible loan is $20,000 $90,000 – ($350,000 x .2) Reserves become $70,000 Loans become $145,000

  3. Sue Ellen deposits $40,000 • FNB makes the maximum possible loan. Required reserves are $8,000 ($40,000 x .2). • Excess reserves are $32,000 ($40,000 - $8,000). • FNB loans out $32,000.

  4. Reserves $78,000 Securities $25,000 Property $215,000 Loans $177,000 Demand Deposits $390,000 Net Worth $105,000 Assets Liabilities Demand deposits increase by $40,000 because that is the amount of the deposit. Reserves increase by $8,000 and loans increase by $32,000 following Sue Ellen’s $40,000 deposit.

  5. David Puddy receives the loan from the FNB. He deposits the $ into the 13th National Bank Assets Liabilities Reserves +$32,000 Demand Deposits +$32,000 Required reserves increase by $6,400 Excess reserves increase by $25,600 The bank may loan out $25,600 (The math will be easier on the FRQ!)

  6. New Money • Max. amt. of new deposits = 1st loan x monetary multiplier = $32,000 x 5 = $160,000

  7. Reserves $88,000 Securities $15,000 Property $215,000 Loans $177,000 Demand Deposits $390,000 Net Worth $105,000 Fed buys bonds The FNB may lend all $10,000. (none of the $ must be kept in required reserves since demand deposits didn’t change.) The maximum increase in the money supply is $50,000 ($10,000 x 5).

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