Map ga Sapling Learning macmillan learning Table 1 shows the financial position
ID: 1116537 • Letter: M
Question
Map ga Sapling Learning macmillan learning Table 1 shows the financial position of the Smithville Bank once $4925.00 has been deposited Assume that the required reserve ratio is 7.00% Table 1. Original Assets and Liabilities The bank manager decides to lend Billy Bob Smith a Assets of the bank's excess reserves. Billy Bob takes the funds to Eula Mae's Used Machines and buys a pickup truck. Eula Mae then deposits the money in her account back at the Smithville Liabilities Reserves: $4925.00 Deposits: $4925.00 Table 2. Assets and Liabilities After Bank Makes a Loarn Assets Reserves: ? Loans Table 2 should show the bank's accounts after the loan is made and the funds again deposited Liabilities Deposits: ? 1. What are the bank's loans in Table 2? Number 2. What are the bank's reserves in Table 2? Number 3. What are the bank's deposits in Table 2? NumberExplanation / Answer
The required reserve ratio is that fraction of demand deposit which a commercial bank usually to hold with them to meet any demand of withdrawal as its a tendency of bank that they want to loan more and more.
In this question the RR Ratio is 7%which means its 344.75$ of 4925$ of total deposit which means bank intially gave loan of 4580.25$ which was further deposited in the bank now for table 2
deposit will be - 4580.25$
Reserve will be 7%of 4580.25$ that is 320.62$
Loan will be 4259.63$