Question

Bank 1 received a deposit of SR1 million. Assuming that the banks retain no excess reserves,...

  1. Bank 1 received a deposit of SR1 million. Assuming that the banks retain no excess reserves, answer the following questions: (2 points)
  1. The reserve requirement is 25 percent.
  1. Fill in the blanks in the table below.
  2. What is the deposit multiplier?

Multiple Deposit Creation

Round

Deposits

Reserves

Loans

Bank 1

Bank2

Bank3

Bank 4

Bank5

All other banks

Totals

SR1, 000,000

SR

SR
  1. Now the reserve requirement is 5 percent.
  1. Fill in the blanks in the similar table.
  2. What is the deposit multiplier?

Multiple Deposit Creation

Round

Deposits

Reserves

Loans

Bank 1

Bank2

Bank3

Bank 4

Bank5

All other banks

Totals

SR1, 000,000

SR

SR
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Homework Answers

Answer #1
Round Deposits reserve= 25% Loans= deposit- reserve
Bank 1 1000000 250000 750000
Bank2 750000 187500 562500
Bank3 562500 140625 421875
Bank 4 421875 105468.75 316406.25
Bank5 316406.25 79101.5625 237304.6875
All other banks 237304.6875 59326.17188 177978.5156
Totals 3288085.938 822021.4844 2466064.453
deposit multiplier= 1/ CRR 1/ .25 4
Round Deposits reserve= 25% Loans= deposit- reserve
Bank 1 1000000 50000 950000
Bank2 950000 237500 712500
Bank3 712500 178125 534375
Bank 4 534375 133593.75 400781.25
Bank5 400781.25 100195.3125 300585.9375
All other banks 300585.9375 75146.48438 225439.4531
Totals 3898242.188 974560.5469 2923681.641
deposit multiplier= 1/ CRR 1/ .05 20
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