Question
Assume that Bank A receives a primary deposit of $100,000 and that it must keep reserves of 10 percent against deposits. a. Prepare a simple
Assume that Bank A receives a primary deposit of $100,000 and that it must keep reserves of 10 percent against deposits.
a. Prepare a simple balance sheet of assets and liabilities for the bank immediately after the deposit is received. b. Assume Bank A makes a loan in the amount that can be safely lent. Show what the banks balance sheet of assets and liabilities would look like immediately after the loan. c. Assume that a check in the amount of the derivative deposit created in Part b was written and sent to another bank. Show what Bank As (the lending banks) balance sheet of assets and liabilities would look like after the check is written.
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