
Macroeconomics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn
Edition 20ISBN: 978-0077660772
Macroeconomics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn
Edition 20ISBN: 978-0077660772 Exercise 24
The balance sheet at the top of the next page is for Big Bucks Bank. The reserve ratio is 20 percent. LO3
a. What is the maximum amount of new loans that Big Bucks Bank can make? Show in columns 1 and 1? how the bank's balance sheet will appear after the bank has lent this additional amount.
b. By how much has the supply of money changed?
c. How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank? Show the new balance sheet in columns 2 and 2?.
d. Answer questions a, b, and c on the assumption that the reserve ratio is 15 percent.

a. What is the maximum amount of new loans that Big Bucks Bank can make? Show in columns 1 and 1? how the bank's balance sheet will appear after the bank has lent this additional amount.
b. By how much has the supply of money changed?
c. How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank? Show the new balance sheet in columns 2 and 2?.
d. Answer questions a, b, and c on the assumption that the reserve ratio is 15 percent.
Explanation
a. The balance sheet is reproduced below...
Macroeconomics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn
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