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What are the required reserves of people national bank

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Reference no: EM131853129

Suppose that the reserve requirement is 12 percent 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) Suppose that the required reserves were 20 percent. 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: EM131853129

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