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mauvefox989Lv1
28 Sep 2019
6. The purpose of this exercise is to illustrate the multiple expansion of bank deposits in a fractional- reserve banking system. Assume the Fedâs legal reserve requirement is 10%
(Formula)
1. a. Required reserves = Required reserve ratio ´ checkable deposits
b. Actual reserves = Required reserves + excess reserves
The consolidated balance sheet of the U.S. banking system indicates:
Assets Liabilities
Reserves $40,000 Checkable deposits $100,000
a. The simple money multiplier equals _______________. Formula:
b. The banking system has excess reserves of $_______________.
Formula (write out formula #1a):
Formula (write out formula #1b):
c. Loans and the money supply can be expanded by a maximum of $_______________.
6. The purpose of this exercise is to illustrate the multiple expansion of bank deposits in a fractional- reserve banking system. Assume the Fedâs legal reserve requirement is 10%
(Formula)
1. a. Required reserves = Required reserve ratio ´ checkable deposits
b. Actual reserves = Required reserves + excess reserves
The consolidated balance sheet of the U.S. banking system indicates:
Assets Liabilities
Reserves $40,000 Checkable deposits $100,000
a. The simple money multiplier equals _______________. Formula:
b. The banking system has excess reserves of $_______________.
Formula (write out formula #1a):
Formula (write out formula #1b):
c. Loans and the money supply can be expanded by a maximum of $_______________.
Mahe AlamLv10
28 Sep 2019
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