The bank you own has the following balance sheet: If the bank suffers a deposit outflow of

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The bank you own has the following balance sheet:

If the bank suffers a deposit outflow of $50 million with a required reserve ratio on deposits of 10%, what actions must you take to keep your bank fromfailing?

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Economics of Money, Banking and Financial Markets

ISBN: 978-0321598905

9th Edition

Authors: Frederic S. Mishkin

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Question Posted: Aug 12, 2012 04:20 AM

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The bank you own has the following balance sheet: If the bank suffers a deposit outflow of

Question:

Assets Liabilities Reserves 75 million Deposits $500 million Loans $525 million Bank capital $100 million

Step by Step Answer:

The 50 million deposit outflow means that reserves fall by 50 million to 25 million Since require...View the full answer

Economics of Money, Banking and Financial Markets

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