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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Question
![Northern Bank: Balance Sheet
Assets
Liabilities
Deposits
Capital
$7,000
$1,000
$8,000
Reserves
$420
$7,580
$8.000
Loans
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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbd52d6bf-51c5-4cbb-a400-155dcc37868f%2Fc7762c15-18b2-4df1-ac42-6131ebf26d5e%2F0lw2i_processed.png&w=3840&q=75)
Transcribed Image Text:Northern Bank: Balance Sheet
Assets
Liabilities
Deposits
Capital
$7,000
$1,000
$8,000
Reserves
$420
$7,580
$8.000
Loans
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
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