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What must bank of aggieville''s owner''s equity be

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Reference no: EM131042362

BONUS HOMEWORK QUESTIONS!!!!!!!!!!! Must be turned in before class Wednesday!

Let's look at a simple balance sheet for the Bank of Aggieville. In Aggieville the Reserve Requirement is 5%.

Bank of Aggieville

Assets Liabilities

Cash $500 Deposits $4000

Deposit in the Fed $500

Loans $2000

Bonds (Securities) $900 Other Liabilities $400

Other $1100 Net Worth/Owner's Equity ????

ALL ANSWERS MUST NOT INCLUDE COMMAS OR DOLLAR SIGNS OR THEY WILL BE COUNTED WRONG. IF THE ANSWER IS FIVE THOUSAND DOLLARS PUT 5000 NOT $5000 OR $5,000 OR 5,000!!! Obviously, you must find the required reserves first to solve for excess reserves.

1. What is the current level of Excess Reserves in the Bank of Aggieville?

What is the maximum amount of new loans that can be created by the whole banking system as a result of this? (Include the excess reserves as part of the loans created and use your money multiplier)

What must Bank of Aggieville's Owner's Equity be?

Reference no: EM131042362

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