Suppose a Bank Has the Following Balance Sheet

question 110

Essay

Suppose a bank has the following balance sheet:

If the bank's usual reserve ratio is 10%, what excess reserves does the bank have? What is the maximum amount that the bank can expand its loans?
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Definitions:

Intangible

Something that cannot be touched or physically measured, often relating to non-physical assets or values.

Inventory Carrying Costs

Expenses related to holding or storing inventory, including warehousing, insurance, depreciation, and opportunity costs.

Straight Salary

Straight salary refers to a fixed amount of pay given to employees irrespective of the number of hours worked or the quantity of work done, typically provided on a regular basis like weekly or monthly.

Retail Stores

Physical outlets where goods are sold directly to the public, usually from a specific location or premises.