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If a bank's required reserves are $740 and the reserve requirement is 10% of deposits, what is the total amount of deposits held by the bank?
If a bank's required reserves are $740 and the reserve requirement is 10% of deposits, what is the total amount of deposits held by the bank?
Given the banking system's balance sheet, if the required reserve ratio is 15%, what is the value of excess reserves?
Given the banking system's balance sheet, if the required reserve ratio is 15%, what is the value of excess reserves?
If Jane deposits $600 at Local Bank and the reserve requirement is 10%, what is the value of required reserves after her deposit?
If Jane deposits $600 at Local Bank and the reserve requirement is 10%, what is the value of required reserves after her deposit?
If the required reserve ratio is 12.5%, what is the value of the money multiplier?
If the required reserve ratio is 12.5%, what is the value of the money multiplier?
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If total deposits in the banking system are $5800, total reserves are $780, and the reserve requirement is 12%, what is the value of $M_1$?
If total deposits in the banking system are $5800, total reserves are $780, and the reserve requirement is 12%, what is the value of $M_1$?
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If the banking system holds $3,000 in securities and $M_1$ is $6,400, what is the total value of loans held by the banking system?
If the banking system holds $3,000 in securities and $M_1$ is $6,400, what is the total value of loans held by the banking system?
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Given the information provided, if the reserve requirement is 12% and excess reserves are $70, what is the total new lending capacity of the banking system?
Given the information provided, if the reserve requirement is 12% and excess reserves are $70, what is the total new lending capacity of the banking system?
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If the required reserve ratio is 15%, Local Bank makes a $300 loan to Harry, and the loan proceeds are deposited into Harry's account at Local Bank, what will be the value of Local Bank's required reserves after the loan?
If the required reserve ratio is 15%, Local Bank makes a $300 loan to Harry, and the loan proceeds are deposited into Harry's account at Local Bank, what will be the value of Local Bank's required reserves after the loan?
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Suppose a bank’s balance sheet looks as follows, and banks are required to hold reserves equal to 10 percent of deposits. Assets Liabilities Reserves $ 740 Deposits $7,000 Loans 6,260 (a) How much ______ reserves does the bank hold?
Suppose a bank’s balance sheet looks as follows, and banks are required to hold reserves equal to 10 percent of deposits. Assets Liabilities Reserves $ 740 Deposits $7,000 Loans 6,260 (a) How much ______ reserves does the bank hold?
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Suppose the banking system’s balance sheet looks like this: Assets Liabilities Reserves Deposits $840 Required $ 126 ______ 70 Loans 644 Total $840 Total $840 (a) What is the required reserve ratio?
Suppose the banking system’s balance sheet looks like this: Assets Liabilities Reserves Deposits $840 Required $ 126 ______ 70 Loans 644 Total $840 Total $840 (a) What is the required reserve ratio?
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Assume Jane deposits $600 at Local Bank, and the reserve requirement is 10%. a.Draw the balance sheet of Local Bank, assuming this is the only deposit. Include required and ______ reserves.
Assume Jane deposits $600 at Local Bank, and the reserve requirement is 10%. a.Draw the balance sheet of Local Bank, assuming this is the only deposit. Include required and ______ reserves.
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What is the value of the money multiplier when the required reserve ratio is (a) 12.5 percent? (b) 15 ______?
What is the value of the money multiplier when the required reserve ratio is (a) 12.5 percent? (b) 15 ______?
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Suppose the following: Total deposits in banking system $5800 Total reserves 780 Reserve requirement 12% M1 6400 Securities 3000 (a) How much cash is in ______?
Suppose the following: Total deposits in banking system $5800 Total reserves 780 Reserve requirement 12% M1 6400 Securities 3000 (a) How much cash is in ______?
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Suppose the following: Total deposits in banking system $5800 Total reserves 780 Reserve requirement 12% M1 6400 Securities ______ (a) How much cash is in circulation?
Suppose the following: Total deposits in banking system $5800 Total reserves 780 Reserve requirement 12% M1 6400 Securities ______ (a) How much cash is in circulation?
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Suppose the following: Total deposits in banking system $5800 Total reserves 780 Reserve requirement 12% M1 6400 ______ 3000 (b) How much does the banking system hold in loans?
Suppose the following: Total deposits in banking system $5800 Total reserves 780 Reserve requirement 12% M1 6400 ______ 3000 (b) How much does the banking system hold in loans?
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Suppose the following: Total deposits in banking system $5800 Total reserves 780 Reserve requirement 12% M1 6400 ______ 3000 (c) What is the total new lending capacity of the banking system?
Suppose the following: Total deposits in banking system $5800 Total reserves 780 Reserve requirement 12% M1 6400 ______ 3000 (c) What is the total new lending capacity of the banking system?
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Study Notes
Bank Balance Sheet
- A bank's balance sheet consists of assets (reserves, loans) and liabilities (deposits).
- Reserves are required to be held equal to a percentage of deposits, known as the reserve requirement.
Reserve Requirements
- The reserve requirement is 10% in the given examples, meaning banks must hold 10% of deposits as reserves.
- Excess reserves are the amount of reserves held above the required amount.
Bank Lending
- A bank can lend an amount equal to its excess reserves.
- The bank's ability to lend is limited by the reserve requirement.
Banking System
- The banking system's balance sheet combines the assets and liabilities of all banks.
- The required reserve ratio is the percentage of deposits that banks must hold as reserves.
- The money supply can be expanded by the amount of excess reserves in the banking system.
Money Multiplier
- The money multiplier is a value that determines the amount of money supply expansion possible.
- The money multiplier is inversely related to the required reserve ratio.
Specific Examples
- A bank with $740 in reserves and $7,000 in deposits has excess reserves of $240 and can lend $240.
- A banking system with $840 in reserves and $840 in deposits has a required reserve ratio of 15% and can expand the money supply by $710.
- A bank with a single deposit of $600 and a 10% reserve requirement has required reserves of $60 and excess reserves of $40.
- The money multiplier is 8 when the required reserve ratio is 12.5% and 6.67 when the required reserve ratio is 15%.
Banking System Analysis
- The total deposits in the banking system are $5,800.
- The total reserves are $780.
- The reserve requirement is 12%.
- M1 is $6,400.
- Securities are $3,000.
- The amount of cash in circulation is $280.
- The banking system holds $4,020 in loans.
- The total new lending capacity of the banking system is $1,320.
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Description
Test your knowledge on bank balance sheets, reserves, and lending capacity with this problem set. Calculate excess reserves and how much a bank can lend based on a given balance sheet.
