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(Solved): Deposits in a bank create both an asset and liability for the bank. Assume a customer deposits $10, ...
Deposits in a bank create both an asset and liability for the bank. Assume a customer deposits $10,000 into bank A. Use the table below to answer questions \#1 through #5. BANK A ASSETS LIABILITIES ASSETS reserves $10,000 checkable deposits $10,000 Assume: the required reserve ratio is = to 6% 1. Calculate required reserves 2. Calculate the excess reserves 3. Calculate the deposit expansion multiplier 4. Calculate the maximum increase in new deposits from the initial $10,000 deposit into bank A 5. If the required reserve ratio changes to 5% what will happen to the banks lending ability (increase or decrease) ?