Find required reserves of peoples national bank does bank

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Reference no: EM13391862

Suppose that the reserve requirement is 10% and the balance sheet of the People's National bank looks like the accompanying example.

a.) What are the required reserves of People's National Bank? Does the bank have any excess reserves?

b.) What is the maximum loan that the bank could extend?

c.) Indicate how the bank's balance sheet would be altered if it extended this loan?

d.) Suppose that the required reserves were 20%. If this were the case, would the bank be in a position to extend any additional loans? Explain?

Assets		Liabilities
Vault Cash	20,000	Checking deposits	200,000
Deposits at Fed	30,000	Net Worth	15,000
Securities	45,000
Loans	120,000

Reference no: EM13391862

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