Answer the Next Questions Based on the Following Balance Sheet

question 16

Essay

Answer the next questions based on the following balance sheet for a chartered bank.Assume the desired reserve ratio is 33%. (a) What is the amount of excess reserves?
(b) By what amount can this bank safely expand its loans?
(c) By expanding its loans by the amount in part (b), what would its demand deposits equal (if all loans were made to customers holding demand deposits)?
(d) If cheques clear against the bank equal to the amount loaned in (b), how much would remain in reserves and in demand deposits?

---

Definitions:

Control Variable

A variable that is kept constant or monitored to minimize its effect on the outcome of the experiment.

Observational Research

A research method where the researcher observes subjects in their natural environment without intervention.

Phenomenon Manipulate

Direct alteration or control exerted over phenomena to investigate causal relationships.

Survey Research

A research method involving the collection of data from a sample of entities to draw inferences about the population of interest, often through questionnaires or interviews.