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The Mt. Sac. Bank has the following balance sheet (in millions of dollars)
Assets Liabilities
______________________________________...
Cash (reserves) $4,000 Demand Deposits $60,000
Deposited at the Fed $5,000 Savings Deposits $30,000
Loans $81,000
Total $90,000 $90,000
The required reserve ratio on all deposits is 5%
a. What, if any, are the bank's excess reserves?
b. How much will the bank loan?
c. If there is no currency drain and all funds loaned are deposted in the Mt. Sac. Bank, what are the bank's excess reserves, if any, after the loans made in part b?
d. Answer part a, b, and c if the required reserve ratio is increased to 8%. plz expl.
How is this question solved?This q is too hard for me.
How is this question solved?The answer is: 10 under par with an 11 handicap.
I'm a good 11 handicap!
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