Write down the required reserves of peoples national bank

Reference no: EM13393345

Suppose that the reserve requirement is 10 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. Indicate how the bank's balance sheet would be altered if it extended this loan (show the new t-account).

d. 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: EM13393345

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