1. Consider a bank with the following balance sheet:

Liabilities	Assets
$525,000,000 Deposits	$50,000,000 Reserves
	$475,000,000 Loans

This bank can liquidate loans at 67 cents on the dollar. Meaning they can sell a $1 loan for $0.67.

1. (2 points) Compute the reserve ratio for this bank.
2. (4 points) Suppose depositors arrived and withdrew $40,000,000. Show the banks new balance sheet. Would the bank need to liquidate any loans?
3. (4 points) Suppose depositors arrived and withdrew $75,000,000. Show the banks new balance sheet. Would the bank need to liquidate any loans?

d. (2 points) How can bank runs cause a recession?