Use the table, which shows commercial bank’s balance sheet, to work Problems. The commercial banks’ desired reserve ratio on all deposits is 5 percent and there is no currency drain.

Calculate the banks’ excess reserves. If the banks use all these excess reserves to make loans, what is the quantity of loans made and the quantity of total deposits after the loans have been made?

Transcribed Image Text:

Assets Reserves at central 25 bank Cash in vault Securities Loans (millions of dollars) Liabilities 15 60 100 Checkable deposits 90 Savings deposits 110