The Monetary System 13 - 13 Problems and Applicanns Q3...

This preview shows page 1 - 3 out of 3 pages.

You've reached the end of your free preview.

Want to read all 3 pages?

Unformatted text preview: 13 . Problems and Applicafinns Q3 Beleaguered State Bank (553) holds $250 million in deposits and maintains a meme ratio of 10 percent. Compiete the faifawmg T—amount for £355. Belemmd State Ballr Assets Liahities Reserves $25 I million Deposils $250 if million Loans $225? rrI'llion Now suppose that BSB's largat depositor withdraws $10 million in cash from her aooount. BSB decide; to ratore its reserve ratio by reducing the amount of loans outstanding. Complete BSB’s new T—aomunt. Belemred State Ball: h Assets Liahities Reserves $24! million Deposils $240 if million Loans $216J million Because 353 is cutting back on its loans, other banks will find they have too Iitfle I mew, causing them to decrease I their loans. 353 may find it dilficult to cut back on its loans immediately because it cannot force people to pay ofi loans. which ofthe following ways repraent an alternative for BSB to return to its original meme ratio? dledc all! that amiy. I I Borrow money from the Fed I I Attract additional deposits I I Borrow money from another bank I I Lend money ...
View Full Document

  • Spring '09
  • Monetary Policy, Federal Reserve System, Fractional-reserve banking, ECON-2301, meme ratio

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern