3. Complete Slide 11: Use T-accounts to show how the bank makes profits as deposits rise by $100. i.e. show the impact of asset transformation on the assets and liabilities of a bank. I Since the bank keep 10% in reserves, a deposit of $100 will cause Required Reserves to by $ , and thus leaving $ in excess reserves. These excess reserves can than be used to make loans, and thus the final impact on loans is a by $ Finally, note that Assets by $ and that Liabilities also by $ 4. Complete Slides 14-15; Liquidity Management (slides 14-15) Suppose that a given bank faces a $10 million deposit outflow. Assess the impact on a bank with High Reserves vs. Low Reserve. Assume a 10\% reserve requirement ratio. Case1: High Reserves