The following balance sheet is for Big Bucks Bank. The reserve ratio is 20 percent.
Instructions: Enter your answers as a whole number.
a. What is the maximum amount of new loans that Big Bucks Bank can make?
$
Using the table above, show in columns 1 and 1' how the bank's balance sheet will appear after the bank has lent this additional amount by inserting the values into the gray shaded cells.
b. By how much has the money supply changed?
$
c. How will the bank’s balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank? Show the new balance sheet in columns 2 and 2' by inserting the values into the gray shaded cells.
d. Using the original figures, revisit questions a, b, and c based on the assumption that the reserve ratio is 15 percent.
What is the maximum amount of new loans that this bank can make?
$
Show in columns 3 and 3' how the bank’s balance sheet will appear after the bank has lent this additional amount. Add values into the gray shaded cells of the table.
By how much has the money supply changed?
$
How will the bank’s balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank? Show this new balance sheet in columns 4 and 4'. Add values into the gray shaded cells of the table.
The following balance sheet is for Big Bucks Bank. The reserve ratio is 20 percent.
Instructions: Enter your answers as a whole number.
a. What is the maximum amount of new loans that Big Bucks Bank can make?
$
Using the table above, show in columns 1 and 1' how the bank's balance sheet will appear after the bank has lent this additional amount by inserting the values into the gray shaded cells.
b. By how much has the money supply changed?
$
c. How will the bank’s balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank? Show the new balance sheet in columns 2 and 2' by inserting the values into the gray shaded cells.
d. Using the original figures, revisit questions a, b, and c based on the assumption that the reserve ratio is 15 percent.
What is the maximum amount of new loans that this bank can make?
$
Show in columns 3 and 3' how the bank’s balance sheet will appear after the bank has lent this additional amount. Add values into the gray shaded cells of the table.
By how much has the money supply changed?
$
How will the bank’s balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank? Show this new balance sheet in columns 4 and 4'. Add values into the gray shaded cells of the table.
