Suppose that Karen deposits $400 into her checking account at the bank. The reserve requirement for Karen's bank is 9%. Assume the bank does not want to hold any excess reserves of new deposits a. Use this information to complete the balance sheet below to show how the bank's assets and liabilities change when Karen deposits the $400. Instructions: Enter your answers as a whole number A Simple Bank Balance Sheet Assets Change in Reserves: Change in Loans) 3 Liabilities Change in Deposits: b. Why are deposits considered liabilities for a bank? O The bank must hold deposits as reserves at the Federal Reserve, O Deposits can be withdrawn at any time O Deposits can be loaned out by the bank. O The bank must pay interest on deposits
Suppose that Karen deposits $400 into her checking account at the bank. The reserve requirement for Karen's bank is 9%. Assume the bank does not want to hold any excess reserves of new deposits a. Use this information to complete the balance sheet below to show how the bank's assets and liabilities change when Karen deposits the $400. Instructions: Enter your answers as a whole number A Simple Bank Balance Sheet Assets Change in Reserves: Change in Loans) 3 Liabilities Change in Deposits: b. Why are deposits considered liabilities for a bank? O The bank must hold deposits as reserves at the Federal Reserve, O Deposits can be withdrawn at any time O Deposits can be loaned out by the bank. O The bank must pay interest on deposits
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Suppose that Karen deposits $400 into her checking account at the bank. The reserve requirement for Karen's bank is 9%. Assume
the bank does not want to hold any excess reserves of new deposits.
a. Use this information to complete the balance sheet below to show how the bank's assets and liabilities change when Karen deposits
the $400
Instructions: Enter your answers as a whole number
A Simple Bank Balance Sheet
Assets
Change in Reserves: 3
Change in Loans) 1
Liabilities
Change in Deposits:
b. Why are deposits considered liabilities for a bank?
O The bank must hold deposits as reserves at the Federal Reserve,
O Deposits can be withdrawn at any time
O Deposits can be loaned out by the bank
O The bank must pay interest on deposits
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