Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please help with the answers to part (C) and part (D) only. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Question 4 (10pt): A&B Bank has $10,000 in deposits. We assume that
Please help with the answers to part (C) and part (D) only.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Question 4 (10pt): A&B Bank has $10,000 in deposits. We assume that the bank choose to keep total reserves exactly equal to the required reserves. It means that banks do not want to hold any excess reserves. Also, we assume that whenever a person gets cash, the individual redeposits the entire amount in her checking account instead of keeping the money as cash. 6.25 (2pt) a. If the reserve ratio is 10%, how much of these deposits must the bank hold in reserve? How much in loans can possible A&B bank issue in the given situation? Construct the T-account for A&B bank. assets liabilities reserve 10000 deposit loan 1000 9000 (1pt) b. What must be true of the total values on each side of the T-account? (3pt) c. Suppose A&B bank loan out all the excess reserves to Britt. Britt who borrows money from A&B bank repays her debt sending the amount to an account of her friend, Zach. Zach's bank, C&D bank wants to loan out all the excess reserves to another borrower, Madi, who keeps her money in her bank account. Construct the T-account for C&D Bank.Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started