Discussion:
Supposed that the reserve requirement is ten percent and the balance sheet of the People's National Bank? Does the bank looks like the accompanying examples.
ASSETS LIABILITIES
vault cash - $20,000checking deposits - $200,000
deposits at fed - 30,000net worth - 15,000
securities - 45,000
loans - 120,000
a)What are the required reserves of people national bank? Does the bank have any excess reserves? Required reserves are $20,000 and excess reserves are $30,000
b)What is the maximum loan that the bank could extend?
c)Indicate how the banks' balance sheet would be altered if it extended this loan