In exhibit 15 5 the bank could a extend new loans by

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International Financial Management
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Chapter 21 / Exercise 7
International Financial Management
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193.In Exhibit 15-5, the bank could:a.extend new loans by $5,000.c.call in $5,000 existing loans.b.extend new loans by $20,000.d.call in $20,000 existing loans.ANS:A
PTS:1DIF:ModerateNAT:BUSPROG: AnalyticTOP:How a Single Bank Creates MoneyKEY:Bloom’s: Comprehension194.Suppose Brad Jones deposits $20,000 into his checking account in the bank shown in Exhibit 15-5. The result would be that the bank must increase its required reserves to:
PTS:1DIF:ChallengingNAT:BUSPROG: AnalyticTOP:How a Single Bank Creates MoneyKEY:Bloom’s: Analysis195.If all banks in the system shown in Exhibit 15-5 were identical to Tucker National Bank, the money multiplier for the system would be:
PTS:1DIF:ModerateNAT:BUSPROG: AnalyticTOP:Multiplier Expansion of Money by the Banking SystemKEY:Bloom’s: Comprehension
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Chapter 21 / Exercise 7
International Financial Management
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196.Suppose Connie Rich deposits $100,000 into her checking account in the bank shown in Exhibit 15-6. The result would be a:
PTS:1DIF:ModerateNAT:BUSPROG: AnalyticTOP:How a Single Bank Creates MoneyKEY:Bloom’s: ComprehensionExhibit 15-6 Balance sheet of Tucker National BankAssetsLiabilitiesRequired reserves$ 20,000Checkable deposits$200,000Excess reserves0Loans180,000TotalTotal197.The required reserve ratio in Exhibit 15-6 is:a.10 percent.c.80 percent.b.20 percent.d.100 percent.ANS:A
PTS:1DIF:EasyNAT:BUSPROG: AnalyticTOP:How a Single Bank Creates MoneyKEY:Bloom’s: ComprehensionExhibit 15-7 Lower Walloon National BankAssetsLiabilitiesReserves$10,000Checkable deposits$10,000198.In Exhibit 15-7, if the required reserve ratio is 20 percent, and Mr. Brown deposits $10,000 in Lower Walloon National Bank. The Lower Walloon National bank has excess reserves of:
PTS:1DIF:ModerateNAT:BUSPROG: AnalyticTOP:How a Single Bank Creates MoneyKEY:Bloom’s: Analysis199.In Exhibit 15-7, if Lower Walloon National bank loans out all of its excess reserves to James Brown sothat Mr. Brown can upgrade his restaurant, and the money is put into Mr. Brown's account at the Lower Walloon National bank, then the bank will have reserves of:
PTS:1DIF:ChallengingNAT:BUSPROG: AnalyticTOP:How a Single Bank Creates MoneyKEY:Bloom’s: Analysis

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