Consider the balance sheet for the Georgia bank as presented below. Georgia Bank Balance Sheet Assets Liabilities
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Question:
Consider the balance sheet for the Georgia bank as presented below.
Georgia Bank Balance Sheet | |||
Assets | Liabilities | ||
Government securities | $1,600 | Checking accounts | $4,000 |
Required Reserves | $400 | Net Worth | $1,000 |
Excess Reserves | $0 |
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|
Loans | $3,000 |
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|
Total Assets | $5,000 | Total Liabilities | $5,000 |
Using a required reserve ratio of 10% and if the bank keeps no excess reserves, write the changes to the balance sheet for each of the following scenarios:
Steve withdraws $200 from his checking account.
The Fed buys $2,000 in government securities from the bank.
Related Book For
Financial Management for Decision Makers
ISBN: 978-0138011604
2nd Canadian edition
Authors: Peter Atrill, Paul Hurley
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