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Unformatted text preview: firne Remaining m Page: (Previous) 1 2 3 4 5 e 7 (Next) 1B Marks 1 Assets Liabilities Reserves $1flrnillion Cheokable Deposits $10“ mill ion Excess Reserves $5 million Bank Capital 5 1!! million Trbiiis $45 million Loans $50 mil n Use Table above Suppose there is a deposit outflow of $5 million dollars The required reserve ratio is 10%. Are there excess reserves or a shortfall in rfierves'? Choose one answer (:3 a. Excess of 1 million (:3 b. Shortfall of [I 5 million. r] r: Shortfall oft million i' d. Excess oft] 50 million. 17 Explain a situation where fractional reserve banking mm help the economy? Explain a situation where it can hurt the economy. Use examples itneeded. Marks 5 Lastly, explain how the Federal Reserve tits into banking system to prevent problems from fractional reserve banking. Answer Format v' Font v] 3129 v' a 1 Q as x2 x2 Q — fig '59 g a J} E lrnage B Table 3 Tempiates ‘:" A v <> because goverrnent not enough money, so they need borrow money. in tbs way, the bank rate will change also it (an afiec’t bank run % Use CII1+V to paste. About The HTML editor ® 13 Table 3 Marks 1 Assets Liabilities Reserves :3 ill million Checkable Deposits $100 million Loans $50 million Bank Capital :5 8 million Trbiiis $45 million Use Table 3. Is Tribank well capitalized based on the capital ratio? Choose one answer if) a No.1tre capital ratio is 7.4% which is below 8% b. No, the capital ratio is 8.0% which is exacliy 3%. _, I: Yes. the capital ratio is 3.0% which is above 5%. it Yes, the capital ratio kit”: which is above 5% 19 What are the pros and Dons of a fractional reserve banking system for society? Msrks' 1 Choose one answer a. Pro: Creatfi more credit than otherwise could be possible. Con Creates banking panics and inflation. {:3 b. Pro: Creatfi wealthy bankers Con: Creates inflation ('3 r: Pro Creates oredil expansion leading the production of real goods and servioes. Con Creates deflation and banking crises _, d. Pro. Keeps our deposits safe. Con creates irritation. 20 lta bank has $100,000 at deposits a required reserve ratio of 1D peroent, arid 537,l]i]i] in reserves, then the maximum deposit outflow it can sustain Mmout altering its balance sheet is?| Marks 1 Choose one answer (:3 a 25,001] (:3 b 15,000 r: 10,000 d 30,000 Save without submitting Submit al and finish Page: (Previous) 1 2 3 4 5 E 7 (Next) You are logged in as Eben Shari (Lngoul) ...
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