Question
500.00 has been deposited into Bank A. The required reserve ratio is 10%, but Bank A also holds 30.00 in excess reserves. Bank A suffered
500.00 has been deposited into Bank A. The required reserve ratio is 10%, but Bank A also holds 30.00 in excess reserves. Bank A suffered Depreciation of the deposit is 50.00.
(a). Indicate what will happen to Bank A's balance sheet as a result of the transaction (b). Indicate what will happen to Bank A's balance sheet as a result of the transaction if the bank does not hold any excess reserves.
(c). Explain THREE ways in which banks can increase their reserves. Share it each of these ways, indicate what will happen to the balance sheet Bank A as a result of the transaction.
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