Northern Bank: Balance Sheet Assets Liabilities $420 $7,580 $8.000 Deposits Capital $7,000 $1,000 Reserves Loans $8,000 Refer to the table above. Assume that Northern Bank's target reserve ratio is 8 percent. In order to achieve its target reserve ratio, Northern Bank must and O A. increase its reserves by $140; decrease its deposits by $140 O B. increase its reserves by $280; increase its loans by $380 OC. increase its reserves by $280; decrease its deposits by $280 O D. increase its reserves by $140; decrease its loans by $140 O E. not change its reserves; not change its deposits
Northern Bank: Balance Sheet Assets Liabilities $420 $7,580 $8.000 Deposits Capital $7,000 $1,000 Reserves Loans $8,000 Refer to the table above. Assume that Northern Bank's target reserve ratio is 8 percent. In order to achieve its target reserve ratio, Northern Bank must and O A. increase its reserves by $140; decrease its deposits by $140 O B. increase its reserves by $280; increase its loans by $380 OC. increase its reserves by $280; decrease its deposits by $280 O D. increase its reserves by $140; decrease its loans by $140 O E. not change its reserves; not change its deposits
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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