Use the information presented in Southwestern Mutual Bank's balance sheet to answer the following questions.

Bank's Balance Sheet
Assets	Liabilities and Owners' Equity
Reserves	$125	Deposits	$1,000
Loans	$500	Debt	$175
Securities	$625	Capital (owners' equity)	$75

Questiion 1:Suppose a new customer adds $100 to his account at Southern Mutal Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and ______ the ______ account.

First blank:

a)increase

b)decrease

Second blank:

a)capital

b)debt

c)deposits

d)loans

e)reserves

Question 2: This would also bring the leverage ratio from its initial value of _____ to a new value of _______.

First blank:

a) 16.67

b) 18.00

c) 18.77

d) 21.40

Second blank:

a) 16.67

b) 18.00

c)18.77

d) 21.40

Question 3: Which of the following is true if the capital requirement? Check all that apply.

a) If specifics a minimum leverage ratio for all banks

b)Its indented goal is to protect the interests of those who hold equity in the bank

c) its intended goal is to protect the interests of the depositors