The bank you own has the following balance sheet:

Assets Liabilities

Reserves $80 million Deposits $600 million

Securities 50 million Borrowings 50 million

Loans 620 million Bank capital 100 million

the required reserve ratio is 10% deposit outflow of $50 million

2. If the banker decides the reserve level is too low, and decides to raise the required reserve ratio from 10 percent, increasing loan requirements, borrowing money from another bank or corporation, or borrowing from the fed.

3. Pick from the two of the 4 options above and state the benefits/costs of each?

Answer: 1) _________________________________________________________

2) ____________________________________________________________

4. What risk is the banker facing if nothing is done?

Answer: ___________________________________________________________________