Map deb pling Suppose that the legal reserve ratio set by the Fed is 10% and tha
ID: 2727080 • Letter: M
Question
Map deb pling Suppose that the legal reserve ratio set by the Fed is 10% and that the Fair Bank in Fairdealing, Missouri, initially exhibits checkable deposit accounts of $240 and a reserve account of $70. A customer of Fair Bank deposits $100 into her checking account. Fair Bank loans 80% of the depositand places the rest in its reserves at the St. Louis Fed How much does Fair Bank have in excess reserves after the deposit and loan? Number 10 Place the figures below to represent changes in the accounts of Fair Bank and the Federal Reserve of St. Louis' balance sheets resulting from the deposit and loan. +$100 +$20 -$100 -$20 +$80 +$10 -$80 $100 Balance Sheet: Fair Bank Balance Sheet: Saint Louis Fed +$80 +$100 abilities Cash Cash Liabilities: Reserves +$20 Net equity: Property Loans Loans +$80 Property O Previous 8 Give Up & View solution 2 Check Answer Next Ex HintExplanation / Answer
Initial reserve of fair bank = 70
Checkable deposit amount = 240
New deposit = 100
Total deposit amount = 240+100
= 340
Reserves required = 340 x 10%
= 34
Excess reserve = 70 -34
= 36
Balance Sheet ( Fair Bank)
Cash
Labilities
340
Reserves
70
Loans
270
Property
Balance Sheet ( St. Louis Bank)
Cash
18
Labilities
20
Reserves
2
Loans
Property
Balance Sheet ( Fair Bank)
Cash
Labilities
340
Reserves
70
Loans
270
Property