Asked by Jesus Armenta on May 16, 2024
Verified
Draw a simple T-account for First National Bank which has $5,000 of deposits, a required reserve ratio of 10 percent, and excess reserves of $300. Make sure your balance sheet balances.
T-Account
A graphical representation of a general ledger account that highlights the debit and credit sides.
Required Reserve Ratio
The fraction of deposits that regulators require a bank to hold in reserve and not lend out.
Excess Reserves
The capital reserves held by a bank or financial institution in excess of what is required by regulators, central bank or other governing bodies.
- Comprehend the principles behind the impact of banking transactions on the configuration of assets and liabilities.
- Examine the association between reserve ratios, the generation of money, and possible constraints on the money multiplier effect.
Verified Answer
MJ
Marcia JensenMay 17, 2024
Final Answer :
First National Bank Assets Liabilities Reserves $800 Deposits $5,000 Loans $4,200\begin{array}{l}\text { First National Bank }\\\begin{array} { l l l l } \text { Assets } & & { \text { Liabilities } } \\\text { Reserves } & \$ 800 & \text { Deposits } & \$ 5,000 \\\text { Loans } & \$ 4,200 & &\end{array}\end{array} First National Bank Assets Reserves Loans $800$4,200 Liabilities Deposits $5,000
Learning Objectives
- Comprehend the principles behind the impact of banking transactions on the configuration of assets and liabilities.
- Examine the association between reserve ratios, the generation of money, and possible constraints on the money multiplier effect.
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