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d. What could the bank do to restore reserve in order to fulfill reserve requirement after the withdrawal? (8 marks) The following is the balance
d. What could the bank do to restore reserve in order to fulfill reserve requirement after the withdrawal? (8 marks)
The following is the balance sheet of a hypothetical bank. Reserve requirement is 10%. Reserves Loans Securities Assets $10 million $80 million $10 million Deposits Bank capital Liabilities $90 million $10 million a. What is asset transformation in commercial banking? (5 marks) b. What would happen to the balance sheet immediately after a $10 million withdrawal from the bank? Show the change in a T-account. (3 marks) c. After the withdrawal, what is the discrepancy between actual reserve and required reserve? (4 marks)Step by Step Solution
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