Suppose there is a 10% reserve requirement, and the bank has the following Balance Sheet Reserves Loans Securities Assets 55 M 250 M 45 M Deposits Bank Capital Liabilities 350 M 50 M Now, let's suppose there is a deposit outflow of $60 million. If the bank only finances its reserve shortages by borrowing from the Federal Reserve, show the bank's balance sheet after the deposit outflow and receiving the loan from the Fed.
Suppose there is a 10% reserve requirement, and the bank has the following Balance Sheet Reserves Loans Securities Assets 55 M 250 M 45 M Deposits Bank Capital Liabilities 350 M 50 M Now, let's suppose there is a deposit outflow of $60 million. If the bank only finances its reserve shortages by borrowing from the Federal Reserve, show the bank's balance sheet after the deposit outflow and receiving the loan from the Fed.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter27: Money And Banking
Section: Chapter Questions
Problem 31P: Humongous Bank is the only bank in the economy. The people in this economy have 20 million in money,...
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