FIN 100 Week 2 Homework Chapter 4 and 5


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FIN 100 Week 2 Homework Chapter 4 Exercise 2

As the executive of a bank or thrift institution you are faced with an intense seasonal demand for loans. Assuming that your loan-able funds are inadequate to take care of the demands, how might your reserve bank help you with this problem?

Chapter 5 Problem 1 and 6

P1: Assume the Banc One receives a primary deposit of $1 million. The bank must keep reserve of 20 percent against its deposit. Prepare a simple balance sheet of assets and liabilities for Banc One immediately after the deposit is ……

P6: Assume a financial system has a monetary base of $ 25 million. The required reserves ratio is 10 percent, and there are no leakages in the system.

a. What is the size of the money multiplier?

b. What will be the system’s money supply?fin 100 week 2 homework