Problem
Assume that excess reserves = $5,000. Loans = $8,000. Treasury bonds = $6,500. Demand deposits = $19,000 and Required reserves = $1,900.
a) Calculate owner's equity
b) Calculate the reserve requirement ratio (RRR)
If Sam deposits $2,350 in this bank.
a) Provide a T account
b) Calculate the new RRR. How much is the new excess reserve? What does this number represent?
c) What is the change in total money supply?