Find the required reserves of peoples national bank does

Reference no: EM13453443

Suppose that the reserve requirement is 10 percent and the balance sheet of the People's National Bank looks like the accompanying example.

a. What are the required reserves of People's National Bank? Does the bank have any excess reserves?

b. What is the maximum loan that the bank could extend?

c. Indicate how the bank's balance sheet would be altered if it extended this loan (show the new t-account).

d. Suppose that the required reserves were 20 percent. If this were the case, would the bank be in a position to extend any additional loans? Explain.

Assets

Liabilities

Vault Cash $20,000

Checking deposits $200,000

Deposits at Fed $30,000

Net Worth $15,000

Securities $45,000

Loans $120,000

Reference no: EM13453443

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