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Use the following data for a banking system and expand it to its limits., exhaust excess reserves) Prepare a new balance sheet and determine TR and...
Use the following data for a banking system and expand it to its limits. (i. e., exhaust excess reserves) Prepare a new balance sheet and determine TR and RR after expansion.
1. Rd = 10%
2. Rt = 1%
3. The public wishes to hold $4 in time deposits for each $1 in demand deposits.
4. The public wishes to hold $0.35 in currency for each $1 in demand deposits
5. The banking system will hold excess reserves of 1% on all demand deposits in excess of $4,000,000, but none on the initial $4,000,000.
ASSETS LIABILITIES
Cash $300,000 Demand Deposits $1,000,000
FR Acct 200,000 Time Deposits 4,000,000
Loans & Sec. 4,500,000
