Suppose that a commercial bank has $100 million of assets and that its capital consists of $10 million of equity. In addition, the bank's return on assets is 1 percent. Calculate the return on equity (ROE) for this bank. 

 If, in a particular year, the government ran a budget deficit of $200 billion and the private sector's holdings of government securities increased by $100 billion, what is the likely dollar increase in the monetary base resulting from the budget deficit?

Answer rating: 100% (QA)

To calculate the return on equity ROE for the bank we need to use the formula ROE Net Income Avera... View the full answer