Question
Use T-account analysis to answer the following questions: a) You just deposited $100 of cash to your chequing account at TD bank. Use the T-
Use T-account analysis to answer the following questions:
a) You just deposited $100 of cash to your chequing account at TD bank. Use the T- account to record the change of TD banks balance sheet. Also write down the T- account for yourself.
b) Suppose TD bank has a desired reserve ratio of 10%. To maximize profit, how much of loans can TD bank make at most? Use the T-account to record the change of balance sheet of TD bank after the maximum loans are made. c) Suppose TD bank pays 1% of annual interest rate for chequable deposits and charges 5% for loan interest. After one year, how much of profit can TD bank earn? Use the T-account to record the change to balance sheet of TD bank after one year.
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