Question
Consider the balance sheet for the Wahoo bank as presented below. Wahoo Bank Balance Sheet Assets Liabilities government securities $1,600 Liabilities: Checking accounts $4,000 Required
Consider the balance sheet for the Wahoo bank as presented below.
Wahoo Bank Balance Sheet | |||
Assets | Liabilities | ||
government securities | $1,600 | Liabilities: Checking accounts | $4,000 |
Required Reserves | $400 | Net Worth | $1,000 |
Excess Reserves | $0 |
|
|
Loans | $3,000 |
|
|
Total Assets | $5,000 | Total Liabilities | $5,000 |
Using a required reserve ratio of 10% and assuming that the bank keeps no excess reserves, write the changes to the balance sheet for each of the following scenarios:
Bennett withdraws $200 from his checking account.
Roland deposits $500 into his checking account.
The Fed buys $1,000 in government securities from the bank.
The Fed sells $1,500 in government securities to the bank.
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