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1. Which balance sheet would a bank rather have, Why? (assume a RRR of 10%) (a) ASSETS | LIABILITIES Reserves 100M | Deposits 500M Loans
1. Which balance sheet would a bank rather have, Why? (assume a RRR of 10%)
(a)
ASSETS | LIABILITIES
Reserves 100M | Deposits 500M
Loans 500M | Bank Capital 100M
OR
(b)
ASSETS | LIABILITIES
Reserves 75M | Deposits 500M
Loans 525M | Bank Capital 100M
2. If a deposit outflow of 50M occurs, which balance sheet would a bank rather have initially, Why? (assume a RRR of 10%)
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