Suppose that Karen deposits $600 into her checking account at the bank. The reserve requirement for Karen's bank is 8%. 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 $600. Instructions: Enter your answers as a whole number. A Simple Bank Balance Sheet Liabilities Change in Deposits: $ Assets Change in Reserves: $ Change in Loans: $ b. Why are deposits considered liabilities for a bank?
Suppose that Karen deposits $600 into her checking account at the bank. The reserve requirement for Karen's bank is 8%. 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 $600. Instructions: Enter your answers as a whole number. A Simple Bank Balance Sheet Liabilities Change in Deposits: $ Assets Change in Reserves: $ Change in Loans: $ b. Why are deposits considered liabilities for a bank?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Suppose that Karen deposits $600 into her checking account at the bank. The reserve requirement for Karen's bank is 8%. 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 $600.
Instructions: Enter your answers as a whole number.
A Simple Bank Balance Sheet
Assets
Change in Reserves: $
Change in Loans: $
Liabilities
Change in Deposits: $
b. Why are deposits considered liabilities for a bank?
● Deposits can be withdrawn at any time.
The bank must pay interest on deposits.
The bank must hold deposits as reserves at the Federal Reserve.
Deposits can be loaned out by the bank.
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