Consider the following balance sheet for one of the commercial banks. Assume the desired reserve ratio...

 

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Consider the following balance sheet for one of the commercial banks. Assume the desired reserve ratio is 8%. Assets Liabilities and capital 20,000 Reserves Loans Buildings Other assets What is the amount of excess reserves? Select one: a $2,500 $500 b. c. -$2,500 d. -$500 e. None of the above ✔ The correct answer is: None of the above Assets Select one: 2,500 Demand deposits 40,000 Saving deposits 10,000 Bank's capital 7,500 C Reserves Loans Buildings Other assets By what amount should this bank change its loans? Q Reserves Loans Buildings Other assets a. Expand by $2,500 b. Expand by $1,500 c. Contract by $2,500 d. Contract by $1,500 e. None of the above * The correct answer is: Contract by $1,500 Assets Select one: Demand deposits 2,500 40,000 Saving deposits 10,000 Bank's capital 7,500 Liabilities and capital 30,000 10,000 2,500 Demand deposits 40,000 Saving deposits 10,000 Bank's capital 7,500 d. Contract by $37,500 e, none of the above 20,000 30,000 10,000 Liabilities and capital 20,000 30,000 10,000 a. Expand by $37,500 b. Expand by $50,000 c. Contract by $18,750 ✓ cross out cross out cross out cross out cross out Assume that all other banks in Canada have the same practice as this bank, what will be the eventual change in the money supply in the entire banking system? cross out cross out cross out cross out cross out cross out cross out cross out cross out cross out Consider the following balance sheet for one of the commercial banks. Assume the desired reserve ratio is 8%. Assets Liabilities and capital 20,000 Reserves Loans Buildings Other assets What is the amount of excess reserves? Select one: a $2,500 $500 b. c. -$2,500 d. -$500 e. None of the above ✔ The correct answer is: None of the above Assets Select one: 2,500 Demand deposits 40,000 Saving deposits 10,000 Bank's capital 7,500 C Reserves Loans Buildings Other assets By what amount should this bank change its loans? Q Reserves Loans Buildings Other assets a. Expand by $2,500 b. Expand by $1,500 c. Contract by $2,500 d. Contract by $1,500 e. None of the above * The correct answer is: Contract by $1,500 Assets Select one: Demand deposits 2,500 40,000 Saving deposits 10,000 Bank's capital 7,500 Liabilities and capital 30,000 10,000 2,500 Demand deposits 40,000 Saving deposits 10,000 Bank's capital 7,500 d. Contract by $37,500 e, none of the above 20,000 30,000 10,000 Liabilities and capital 20,000 30,000 10,000 a. Expand by $37,500 b. Expand by $50,000 c. Contract by $18,750 ✓ cross out cross out cross out cross out cross out Assume that all other banks in Canada have the same practice as this bank, what will be the eventual change in the money supply in the entire banking system? cross out cross out cross out cross out cross out cross out cross out cross out cross out cross out

Answer rating: 100% (QA)

Total Deposits 200003000050000 Reserve Requirement 8 500004000 Hence Excess Reserves ... View the full answer