08 Jun Question Answer the next 5 questions ba
Question
Answer the next 5 questions based on the following partial balance sheet for the 1st National Bank of Anywhere. Assets Liabilities___________ Cash 110,000 DD 2,000,000 rr = 10% Dep at Fed 90,000 Treasury Bills 100,000 28. This bank can safely expand its loan portfolio by ______ dollars.
29. If the Fed buys 100,000 in T-bills from this bank then
a. its Actual Reserves will fall by 100,000.
b. its DD will increase.
c. it will have to reduce its loan portfolio.
d. its Actual Reserves will increase by 90,000.
e. none of the above are correct.
30. This bank will be able to expand its loan portfolio if
a. the Fed raises the rr to 15%.
b. the Fed sells 50,000 in T-bills to this bank.
c. a customer of this bank withdraws 20,000 from its checking account.
d. none of the above are correct.
e. all of the above are correct.
31. Under which of the following scenarios is this bank most likely to participate on the demand side of the Federal Funds Market?
a. the Fed sells the bank $50,000 of T-bills
b. the Fed purchases $50,000 of T-bills from this bank
c. the Fed lowers the reserve ratio to 5%
d. the Fed purchases $50,000 of T-bills from a customer of this bank who then deposits the Fed Res check in his/her checking account at the bank.
32. If this bank grants new loans in the amount of 100,000
a. its XR will increase
b. Its RR will increase
c. its RR may increase
d. its XR may increase
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