Connect Problem 10-11 (algo)
Below is the simplified balance sheet of Gorgonzolan commercial banks at some point in time.
able[[Assets,Amount,Liabilities,Amount],[Currency (= reserves),400,000,Deposits,700,000],[Loans,300,000,,]]
Assume that the Gorgonzolan commercial banks desire to hold reserves of 20 percent of deposits and that the public holds no currency long term.
Instructions: Enter your responses as whole numbers.
a. Given the data in the balance sheet, the Gorgonzolan commercial banks want to hold 140,000 in reserves.
b. The Gorgonzolan commercial banks currently have 26,000 in extra reserves that they would like to lend out.
c. Assuming that no additional reserves enter the Gorgonzolan banking system, the final values of bank reserves, loans, and deposits are:
Final consolidated balance sheet
able[[Assets,Amount,Liabilities,Amount],[ able[[Currency Final value of bank reserves],140,000,Deposits,700,000],[Loans,274,000,]]
d. The final value of the money supply is: guilders.