f. decreased by $1 million
Question 8
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The following table is a consolidated balance sheet of the banking system. Assume the numbers are in $billions.
Assets Liabilities and net worth
Reserve 400 Checkable deposits 500
Loans 100 Other liabilities 50
Securities 50
Assume the required reserve ratio is 10%.
What is the value of the excess reserve of the banking system?
What is the value of the monetary multiplier?
The maximum lending created by the banking system is:
When the banks buy $50 billion government securities from the central bank using excess reserve, the value of total assets of the banking system will be:
$350 billion
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