Solved: Bank loan without acquiring additional funds, Macroeconomics

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Bank loan without acquiring additional funds

Problem: Suppose that a bank faces a balance sheet illustrated below, and the required reserve ratio is 20%.

ASSETS LIABILITIES

Reserves $50,000 Deposits $100,000
Loans $50,000
Total $100,000 Total $100,000

Question 1: How much more could this bank loan out without acquiring additional funds?

Question 2: Starting with the balance sheet above, suppose that a large depositor withdraws $50,000. With what action might the bank respond to this withdrawal, assuming other depositors are not available.

Question 3: Draw a new balance sheet reflecting the end result after the changes explained in part B.

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Macroeconomics: Bank loan without acquiring additional funds

Reference No:- TGS01746919

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Macroeconomics: Bank loan without acquiring additional funds

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