Fully loaned up and they face the same reserve ratio

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Reference no: EM131392609

Please answer the next 5 questions based on the following partial balance sheet for the 1st National Bank of Anywhere.

Assets Liabilities___________

Cash 200,000 DD 2,000,000 XR = 20,000

Dep at Fed 120,000

Treasury Bills 80,000

1. This bank has RR in the amount of _____ dollars.

2. The rr for this bank is equal to _____.

3. This bank can safely expand its loan portfolio by _______ dollars.

4. Suppose all other banks in the system are “fully loaned up” and they face the same reserve ratio. The maximum potential increase in the money supply is._____

5. If the Fed were to change the rr to 10% for this bank then

a. this bank would have a deficiency in its reserves.

b. could expand its loan portfolio by an additional 100,000.

c. would need to sell some of its T-bills to raise reserves.

d. could expand its loan portfolio by 120,000.

e. none of the above are correct.

Reference no: EM131392609

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