Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Chapter 25, Problem 4SQ
To determine
The minimizing of the
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Last Bank of Panorama Springs
Assets:
Liabilities:
Reserves
$25.00
Deposits
$175.00
Loans
$150.00
If the reserve requirement is 12 percent, what is the state of this bank?
a. It has excess reserves of more than $5000.
b. It has excess reserves of less than $5000.
c. It has less reserves than required.
d. It can make a new loan of $17,500.
Required reserves of banks are a fixed percentage of their
a.
deposits.
b.
All of these responses are correct.
c.
loans.
d.
assets.
What does it mean when a commercial bank has "excess reserves"? Select one: a. It is making above-normal profits on its loans to customers. b. Its actual reserves are less than its target reserves. c. It is in a position to make additional loans. d. Its reserves exceed its loans. e. Its loans to customers exceeds its target reserves..
Chapter 25 Solutions
Economics For Today
Ch. 25.3 - Prob. 1YTECh. 25 - Prob. 1SQPCh. 25 - Prob. 2SQPCh. 25 - Prob. 3SQPCh. 25 - Prob. 4SQPCh. 25 - Prob. 5SQPCh. 25 - Prob. 6SQPCh. 25 - Prob. 7SQPCh. 25 - Prob. 8SQPCh. 25 - Prob. 9SQP
Ch. 25 - Prob. 10SQPCh. 25 - Prob. 11SQPCh. 25 - Prob. 1SQCh. 25 - Prob. 2SQCh. 25 - Prob. 3SQCh. 25 - Prob. 4SQCh. 25 - Prob. 5SQCh. 25 - Prob. 6SQCh. 25 - Prob. 7SQCh. 25 - Prob. 8SQCh. 25 - Prob. 9SQCh. 25 - Prob. 10SQCh. 25 - Prob. 11SQCh. 25 - Prob. 12SQCh. 25 - Prob. 13SQCh. 25 - Prob. 14SQCh. 25 - Prob. 15SQCh. 25 - Prob. 16SQCh. 25 - Prob. 17SQCh. 25 - Prob. 18SQCh. 25 - Prob. 19SQCh. 25 - Prob. 20SQ
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- A bank has outstanding loans of $7,500, reserves of $2,500, and deposit liabilities of $10,000. If the required reserve ratio is 10%, this bank: A. Is holding excess reserves of $1,000 B. Is in a position to make a new loan for $1,500 C. Is in a position to make a new loan for $2,500 D. Has less reserves than requiredarrow_forwardAssuming that the reserve ratio is 10%, what amount of excess reserves are held by with the bank balance sheet listed below? Assets Liabilities & Net Worth Reserves $280,000 Checking deposits $2,800,000 Loans Outstanding $2,920,000 Total $3,200,000 Net Worth Stockholders' Equity $400,000 Total $3,200,000 a. $240,000 b. zero c. $320,000 d. $280,000arrow_forwardWhen the reserve requirement changes, which of the following will change for an individual bank? Multiple Choice a.) transactions account balances and lending capacity b.) required reserves, excess reserves, and lending capacity c.) transactions account balances, total reserves, and excess reserves d.) total reserves, required reserves, and excess reservesarrow_forward
- A commercial bank has actual reserves of $1 million and checkable-deposit liabilities of $9 million, and the required reserve ratio is 10 percent. The excess reserves of the bank are: Select one: a. $50,000 b. $100,000 c. $900,000 d. $1 millionarrow_forwardWhat a bank owes to someone else is considered part of the bank’s ________. Select one: a. liabilities b. assets c. net worth d. excess reservesarrow_forwardBanks can make loans as long as they have excess government securities. required reserves. deposits. excess reserves. reserves.arrow_forward
- How to figure out the banks' excess reserves.arrow_forwardc and d Balance sheet of the Winter Bank Assets Liabilities Cash $ 8,000 Deposited with the Fed $ 4,000 Loans $ 138,000 Deposits $ 100,000 Capital $ 50,000 Total $ 150,000 Total $ 150,000 The required reserve ratio on all deposits is 10% a. What, if any, are this bank's excess reserves? b. How much new amount of loan will this bank be able to create because of the excess reserves? c. How much new amount of loan will the entire banking system be able to create because of this excess reserves? d. Answer part a, b and c if the required reserve ratio is changed to 8%.arrow_forwardIf a bank has $150 million in deposits and $25 million in reserves with a reserve requirement of 0.15, million a. how much are its required reserves? million b. how much excess reserves does it have? million c. how much can it lend?arrow_forward
- In your own words, please define the following terms: asset, balance sheet, credit risk, excess reserves, interest- rate risk, liquidity risk, required reserves,Federal deposit insurance. Please make it simple and no plagiarism thank youarrow_forwardEconomic stealth bank has deposits of $700 million. And hold reserves of $20 million and has purchased government bonds worth $350 million. The banks loans, if sold at the current market value, would be worth $600 million. What is the value of the biggest total liabilities?arrow_forwardUse the information below to find the missing information. 1. Chase Bank Assets Liabilities Total Reserves Transaction Deposits 5,500,000 Required 660,000 Excess 2,000,000 Loans Total Assets 5.500,000 Total Liabilities 5,500,000 a. How much is this bank holding in total reserves? b. What is the required reserve rate for this bank? e. What amount of Louns has this bank made?arrow_forward
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