Suppose a banks balance sheet looks as follows: and banks are required to hold reserves equal to

Question:

Suppose a bank€™s looks as follows:

Liabilities Assets Reserves $ 690 Deposits S6,000 Loans 5,310

and banks are required to hold reserves equal to 10 percent of deposits.

(a) How much excess reserves does the bank hold?

(b) How much more can this bank lend?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...