Question: using the first page please help me figure pit the answers to the second page a) Current reserves for bank A = cash in vault

using the first page please help me figure pit the answers to the second page  using the first page please help me figure pit the answers
to the second page a) Current reserves for bank A = cash

a) Current reserves for bank A = cash in vault + dep@ fed =$500+1500=$2000 b) The required reserve ratio is 20% je 20% of 10,000= $2000 Since the required reserve and actual reserve is equal, so there would be no excess reserves and hence no new loans would be made. c) Bank A balance sheet Assets liabilities Cash in vault 1000 Deposit 10500 Dep@ fed Bonds 3000 Loans 15000 1500 So the cash at bank vault and the deposits both would be increased by 500$. This change would be before any new loans. d) Calculate Bank A's new level of: total reserves, required reserves, and excess reserves. Be sure to explain your work. e) How many new loans can Bank A make from its reserves? Explain. f) Assuming that bank A lends out the amount that you calculated in part (e), and that the new loan is deposited in Bank B, illustrate the initial impact (before Bank B makes any new loans) of this deposit on Bank B's balance sheet below. Explain each entry you make. BANKB BALANCE SHEET LIABILITIES ASSETS Dep @ Fed Cash in Vault Deposits Bonds Since you don't know the original numbers, just show any changes that would occur. Loans a) Current reserves for bank A = cash in vault + dep@ fed =$500+1500=$2000 b) The required reserve ratio is 20% je 20% of 10,000= $2000 Since the required reserve and actual reserve is equal, so there would be no excess reserves and hence no new loans would be made. c) Bank A balance sheet Assets liabilities Cash in vault 1000 Deposit 10500 Dep@ fed Bonds 3000 Loans 15000 1500 So the cash at bank vault and the deposits both would be increased by 500$. This change would be before any new loans. d) Calculate Bank A's new level of: total reserves, required reserves, and excess reserves. Be sure to explain your work. e) How many new loans can Bank A make from its reserves? Explain. f) Assuming that bank A lends out the amount that you calculated in part (e), and that the new loan is deposited in Bank B, illustrate the initial impact (before Bank B makes any new loans) of this deposit on Bank B's balance sheet below. Explain each entry you make. BANKB BALANCE SHEET LIABILITIES ASSETS Dep @ Fed Cash in Vault Deposits Bonds Since you don't know the original numbers, just show any changes that would occur. Loans

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!