Given an initial deposit of $200, and assuming that required reserve ratio equals 5%, and that bank customers do not hold any currency, fill out the following chart for three rounds of deposits. Round # Deposits Required Reserves Excess Reserves Loans 1 $200 ___ _ _ 2 _ _ _ _ 3 _ _ _ _____ If the Auraria Campus Bank borrows $10,000 from the Fed, how much can this bank lend out to its customers? What three actions could the Fed initiate to motivate the Bank of Auraria to make less loans, and thus, enable the Fed to decrease the growth rate of the nation’s money supply?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter25: Money, Banking, And The Federal Reserve System

Section: Chapter Questions

Problem 14P

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Given an initial deposit of $200, and assuming that required reserve ratio equals 5%, and that bank customers do not hold any currency, fill out the following chart for three rounds of deposits.

Round # Deposits Required Reserves Excess Reserves Loans

1 $200 _______ _______ _______

2 _______ _______ _______ _______

3 _______ _______ _______ _______

If the Auraria Campus Bank borrows $10,000 from the Fed, how much can this bank lend out to its customers?
What three actions could the Fed initiate to motivate the Bank of Auraria to make less loans, and thus, enable the Fed to decrease the growth rate of the nation’s money supply?

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