Homework answers / question archive / The combined balance sheet of all the commercial banks in the economy is as follows (in billions of dollars): Assets : Reserves =25 Government Securities = 75 Loans =150 Liabilities: Deposits=250 a) Assume this bank has no excess reserves, what is the reserve requirement? b) If the Fed purchases securities of $25 billion, how much in excess reserves do the banks have immediately after this transaction? c) By how much would the money supply increase if the banks fully utilized their lending capacity capacity and all money lent was redeposited into the banking system? 

The combined balance sheet of all the commercial banks in the economy is as follows (in billions of dollars): Assets : Reserves =25 Government Securities = 75 Loans =150 Liabilities: Deposits=250 a) Assume this bank has no excess reserves, what is the reserve requirement? b) If the Fed purchases securities of $25 billion, how much in excess reserves do the banks have immediately after this transaction? c) By how much would the money supply increase if the banks fully utilized their lending capacity capacity and all money lent was redeposited into the banking system? 

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The combined balance sheet of all the commercial banks in the economy is as follows (in billions of dollars):

Assets :

Reserves =25

Government Securities = 75

Loans =150

Liabilities:

Deposits=250

a) Assume this bank has no excess reserves, what is the reserve requirement?

b) If the Fed purchases securities of $25 billion, how much in excess reserves do the banks have immediately after this transaction?

c) By how much would the money supply increase if the banks fully utilized their lending capacity capacity and all money lent was redeposited into the banking system?