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 solutionspile.com

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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) ?

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