1. Consider a bank with the following assets and liabilities on its balance sheet: 90 in Treasury bonds; 30 in reserves; 200 in checkable deposits; and 100 in mortgage loans to households. The required reserve ratio is 10%.

2. A. Set up the balance sheet. Rank assets from least to most liquid, and dont forget capital.

3. B. What is the maximum level of deposit withdrawals that this bank can withstand, and still meet its reserve requirements?

4. C. There is a deposit outflow of 25. Set up the banks balance sheet after the deposit outflow. Is the bank insolvent? Is it illiquid? Why?