Connect Problem 10-11 (algo)
Below is the simplified balance sheet of Gorgonzolan commercial banks at some point in time.
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 140000 in reserves.
b. The Gorgonzolan commercial banks currently have 260000 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
Assets
Amount
Liabilities
Amount
Currency Final value of bank
Deposits
reserves
Loans
d. The final value of the money supply is: guilders.