chapter 15 problem 5

302 PART FIVE Money Bang and Monetary Policy Suppose that the Fed has set the new that has collectively ha v is the maximum amount of new checked can be red by the LO15.5 B. SOL . 52 billion b. 5200 million d. 5.20 billion w e. What hat your o w n while his ed so they 101 W h. Decreased Stayed the same PROBLEMS 1. Suppose the assets of the Silver Lade Banke S100.000 higher than on the previous day is worth is wp 20000 By how much and in what direction must its liabilities have changed from the day be ? LO15.2 2. Suppose the Serendipity Bank has escos reserves of SR.000 und checkable deposits of $150,000. If the reserve ratio is 20 percent what is the size of the hank a l reserves? LO 15.2 Third National Bank has reserves of 20 and cheche de posits of S100,000. The reserve rate is 20 percent Households deposit $5.000 in currency into the bank and that currency is added to reserves. What level of excess reserves does the bank now have? LO 15.3 4. Suppose again that Third National Bank has reserves of $20.000 and checkable deposits of $100,000. The reserve ratio is 20 percent. The bank now sells 55.000 in securities to the Federal Reserve Bank in its district, receiving a $5,000 in- crease in reserves in return. What level of excess reserves does the bank now have? By what amount does your answer differ (yes, it does from the answer to problem 37 LO15.3 5. The following balance sheet is for Big Bucks Bank. The reserve ratio is 20 percent. L015.3 additional amount Hy how much has the supply of money changed How will the bank's balance sheet perhe w for the crea te new bans cleared against the banks the balance columns 2 and 2. d. Answer questions a, b, and on the assumption reserve ratio is 15 percent Suppose the following simplified consolidated bulan few the entire commercial banking system and that all in lions of dollars. The reserve ratio is 25 per 10 Liabilities and netwo Reserves $52 Checkable decouts 1200 Loans 100 L isties and net worth ') (2) Reserves $22.000 Securities 38,000 Loans 40.000 Checkable deposits $100,000 What is the amount of excess reserves in this com banking system? What is the maximum amount the hunki system might lend? Show in columns 1 and 1' how the consolidated balance sheet would look after this month been lent. What is the size of the monetary multiplier! b. Answer the questions in part a assuming the reserves 20 percent. What is the resulting difference in the amount that the commercial banking system can lend? 7. If the required reserve ratio is 10 percent, what is the monetary multiplier? If the monetary multiplier is 4. what is the required reserve ratio? LO15.5 a. What is the maximum amount of new loans that Big Bucks Bank can make? Show in columns 1 and I' how the bank's