Bank Balance Sheets Practice- Macro 4:13

Jacob Clifford explains bank balance sheets, covering assets, liabilities, reserves, and owner's equity. He uses examples to show how deposits and Federal Reserve actions affect the money supply. The video emphasizes understanding reserve requirements and the multiplier effect in banking.

What is considered a liability for a bank?

• The bank's building

• The money deposited by customers

• The bank's profits

• The money the bank lends out

If a bank has $20,000 in demand deposits and $2,000 in required reserves, what is the reserve requirement percentage?

• 20%

• 15%

• 10%

• 5%

What happens to the M1 money supply when $1,000 is deposited into a bank?

• It remains unchanged

• It increases by $1,000

• It decreases by $1,000

• It increases by $900

How much can a bank initially loan out if $1,000 is deposited and the reserve requirement is 10%?

• $900

• $1,000

• $0

• $100

What is the total increase in the money supply when a bank loans out $900 with a multiplier of 10?

• $1,000

• $900

• $10,000

• $9,000

When the Fed buys $1,000 worth of bonds, how much can the bank initially loan out?

• $0

• $1,000

• $900

• $100

What is the effect on the money supply when the Fed buys bonds compared to when money is deposited?

• Only a portion is multiplied when bonds are bought

• The entire amount is multiplied when bonds are bought

• There is no multiplication in either case

• The entire amount is multiplied when money is deposited