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ACC - Suppose that the reserve requirement is 10 percent




Question;Suppose that the reserve requirement is 10 percent and the balance sheet of the People's National Bank looks like the accompanying example.a. What are the required reserves of People's National Bank? Does the bank have any excess reserves?b. What is the maximum loan that the bank could extend?c. Indicate how the bank's balance sheet would be altered if it extended this loan (show the new t-account).d. Suppose that the required reserves were 20 percent. If this were the case, would the bank be in a position to extend any additional loans? Explain.Assets LiabilitiesVault Cash $20,000 Checking deposits $200,000Deposits at Fed $30,000 Net Worth $15,000Securities $45,000 Loans $120,000


Paper#39294 | Written in 18-Jul-2015

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