Question
Table 1 Assets Liabilities Reserves $400 Demand deposits $1000 Gov. securities $300 Other liabilities $200 Loans $500 Owners equity $300 Other $300 Total assets $1500
Table 1
Assets | Liabilities |
Reserves $400 | Demand deposits $1000 |
Gov. securities $300 | Other liabilities $200 |
Loans $500 | Owners equity $300 |
Other $300 | |
Total assets $1500 | Total liabilities $1500 |
Part IV. A hypothetical balance is shown for a commercial bank in Table I. Assume the reserve requirement is initially 20 percent.
Use t-accounts to show how this balance sheet would appear after the following transactions? With each t-account calculate the amount of excess reserves after the transaction. Consider each transaction to be independent by returning to the original situation. Do not make the transactions cumulative.
a. The bank purchases a $100 government bond. Actual______ Excess______
b. A customer deposits $100 in a checking account Actual______ Excess______
c. The bank makes a $100 loan to a customer. Actual_______Excess______
d. A customer writes a check for $100 to pay a debt to another bank. Actual____ Excess____
e. The bank borrows $100 from the Federal Reserve. Actual_____Excess_____
f. The Federal Reserve raises the reserve ratio to 25%. Actual_____ Excess_____
PLEASE ANSWER ALL QUESTIONS
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