Question

The following table shows a simplified consolidated balance sheet for the entire

Answer 1

Answer:

Kindly check explanation

Explanation:

Excess reserve = (Actual reserve - required reserve)

Required reserve = reserve ratio × Checkable deposit

Required reserve = 0.25 × $400 billion

Required reserve = $100 billion

Excess reserve = $96 - $100 = - $4billion

B) money multiplier = 1/ required reserve ratio

1/0.25 = 4

Maxumum amount that can be Lent = 4 × 4 = $16 million

If reserve ratio = 15%

Required reserve = 0.15 × $400 billion = $60 billion

Excess reserve = $96 - $60 = $36 billion

Monetary multiplier = 1/ 0.15 = 6.667

Maximum amount of loan = 6.667 × 36 = $240 billion