Question details

Policy Makers & Money Supply
$ 10.00

Finance class:
1) Assume that Banc One receives a primary deposit $1 million. The bank must keep reserves of 20 percent against its deposits. Prepare a simple balance sheet of assets and liabilities for Banc One immediately after the deposit is received.
2) The Simplex financial system is characterized by a required reserved ratio of 11 percent; initial excess reserves are $1 million, and there are no currency or other leakages.
a. What would be the maximum amount of checkable deposits after deposit expansion l, and what would be the money multiplier?
b. How would your answer in (a) change if the reserve requirement had been 9 percent?

These are problem solving questions...Not a paper.

Available solutions