Suppose again that checkable deposits started off as $400,000 in First Main Street Bank, the required reserve ratio (r) is 15%, with and there are no excess reserves and no cash leakage. Suppose the Fed buys $8,000 worth of government securities from First Main Street Bank. Complete the following table to reflect the Fed's purchase on the balance sheet for First Main Street Bank. Reserves Loans Assets Liabilities Checkable Deposits $400,000 Does First Main Street Bank have any excess reserves now? No; the bank has zero excess reserves. OYes; the bank has $1,200 in excess reserves. O Yes; the bank has $51,000 in excess reserves. Yes; the bank has $8,000 in excess reserves.
Suppose again that checkable deposits started off as $400,000 in First Main Street Bank, the required reserve ratio (r) is 15%, with and there are no excess reserves and no cash leakage. Suppose the Fed buys $8,000 worth of government securities from First Main Street Bank. Complete the following table to reflect the Fed's purchase on the balance sheet for First Main Street Bank. Reserves Loans Assets Liabilities Checkable Deposits $400,000 Does First Main Street Bank have any excess reserves now? No; the bank has zero excess reserves. OYes; the bank has $1,200 in excess reserves. O Yes; the bank has $51,000 in excess reserves. Yes; the bank has $8,000 in excess reserves.
Chapter25: Money, Banking, And The Federal Reserve System
Section: Chapter Questions
Problem 13P
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Transcribed Image Text:Suppose again that checkable deposits started off as $400,000 in First Main Street Bank, the required reserve ratio (r) is 15%, with and there are no
excess reserves and no cash leakage.
Suppose the Fed buys $8,000 worth of government securities from First Main Street Bank.
Complete the following table to reflect the Fed's purchase on the balance sheet for First Main Street Bank.
Reserves
Loans
Assets
Liabilities
Checkable Deposits $400,000
Does First Main Street Bank have any excess reserves now?
No; the bank has zero excess reserves.
OYes; the bank has $1,200 in excess reserves.
O Yes; the bank has $51,000 in excess reserves.
Yes; the bank has $8,000 in excess reserves.
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