2) The bank you manage has the following balance sheet: Assets Reserves = $75m Loans =...

 

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2) The bank you manage has the following balance sheet: Assets Reserves = $75m Loans = $425m Liabilities Deposits $400m Bank capital = $100m a) Use a t-account to show the effect of a $50m deposit outflow and then draw the bank's new balance sheet. b) Suppose the desired minimum reserve ratio is 10%. Name at least two different actions your bank could take in response to the deposit outflow to ensure they meet the minimum reserve ratio. Make sure to specify the magnitude of each action (e.g., dollar amounts). c) What are the associated costs of each action described in part b? 2) The bank you manage has the following balance sheet: Assets Reserves = $75m Loans = $425m Liabilities Deposits $400m Bank capital = $100m a) Use a t-account to show the effect of a $50m deposit outflow and then draw the bank's new balance sheet. b) Suppose the desired minimum reserve ratio is 10%. Name at least two different actions your bank could take in response to the deposit outflow to ensure they meet the minimum reserve ratio. Make sure to specify the magnitude of each action (e.g., dollar amounts). c) What are the associated costs of each action described in part b?

Answer rating: 100% (QA)

a TAccount for the effect of a 50m deposit outflow Assets Reserves 50m Decrease Loans No change Liab... View the full answer