commercial banking system, required reserve ratios, expanding supply of money, etc.

[dbupton]

Could someone show me how to calculate these?

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1. Answer the question, based on the following consolidated balance sheet for the commericial banking system. Assume the required reserve ratio is 12%. All figures are in billions of dollars.

Assets	Liabilities + Net Worth
Reserves $60 Loans 100 Securities 25 Property 100	Checkable Deposits $60 Stock Shares 135

Refer to the above data. What is the maximum amount by which the commercial banking system can expand the supply of money by lending?

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2. A commercial bank has checkable-deposit liabilities of $500,000, reserves of $150,000, and a required reserve ratio of 20%.

(a) What is the amount by which a single commercial bank can increase loans?

(b) What is the amount by which the banking system can increase loans?

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3. Assume that the reserve ratio is 20% and banks in the system are loaning out all their excess reserve. If people collectively cash out $10 billion from their checking accounts, what then will be the lending liability of the banking system (increased or decreased, and by how much)?

 

[stapel]

Could someone show me how to calculate these?

Have these topics not yet been covered in class? If not, maybe the lecture, when added to your textbook, will answer your questions. If so, what have you tried and where are you stuck? Please be complete. Thank you!

1. Answer the question, based on the following consolidated balance sheet for the commericial banking system. Assume the required reserve ratio is 12%. All figures are in billions of dollars.

Assets	Liabilities + Net Worth
Reserves $60 Loans 100 Securities 25 Property 100	Checkable Deposits $60 Stock Shares 135

Refer to the above data. What is the maximum amount by which the commercial banking system can expand the supply of money by lending?

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2. A commercial bank has checkable-deposit liabilities of $500,000, reserves of $150,000, and a required reserve ratio of 20%.

(a) What is the amount by which a single commercial bank can increase loans?

(b) What is the amount by which the banking system can increase loans?

---

3. Assume that the reserve ratio is 20% and banks in the system are loaning out all their excess reserve. If people collectively cash out $10 billion from their checking accounts, what then will be the lending liability of the banking system (increased or decreased, and by how much)?

 

[Njords]

for 1), did you notice anything when you took the totals of both sides of the balance sheet?