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Macroeconomics 2nd Edition by Campbell McConnell ,Stanley Brue,Sean Flynn
Edition 2ISBN: 978-0077416409Macroeconomics 2nd Edition by Campbell McConnell ,Stanley Brue,Sean Flynn
Edition 2ISBN: 978-0077416409 Exercise 12
Suppose the simplified consolidated balance sheet shown below is for the entire commercial banking system. All figures are in billions. The reserve ratio is 25 percent. LO5
Assets
?(1)
Liabilities and Net Worth
??????????(2)
Reserves
Securities
Loans
$ 52 ___
48 ___
100 ___
Checkable deposits
$200 ___
a. What amount of excess reserves does the commercial banking system have? What is the maximum amount the banking system might lend? Show in column 1 how the consolidated balance sheet would look after this amount has been lent. What is the monetary multiplier?
Assets
?(1)
Liabilities and Net Worth
??????????(2)
Reserves
Securities
Loans
$ 52 ___
48 ___
100 ___
Checkable deposits
$200 ___
a. What amount of excess reserves does the commercial banking system have? What is the maximum amount the banking system might lend? Show in column 1 how the consolidated balance sheet would look after this amount has been lent. What is the monetary multiplier?
Explanation
Verified
Verified
a. The balance sheet is reproduced below...
Macroeconomics 2nd Edition by Campbell McConnell ,Stanley Brue,Sean Flynn
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