Expert Solutions

Suppose a bank’s balance sheet looks like this:
Assets                                                                 Liabilities
Reserves                                                   Deposits $900
Excess        $75
Required       65
Loans           760
Total          $900                           Total                    $900
What is the required reserve ratio?
What is the value of the money multiplier when the required reserve ratio is
a) 5 percent?
b) 4 percent?