Required reserve ratio imposed

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Reference no: EM132249862

1. Consider the following accounts of the First National Bank.

Assets $mn Liabilities $mn

--------------------------------

Reserves 20 Deposits 90

Loans 80 Share Capital 10

---------------------------------

Required reserve ratio imposed by the Fed is 10%.

a. If the Bank experiences a deposit outflow of $15 mn,

a. what is the new level of deposits?

b. what is the new level of reserves?

c. what is the resulting reserve ratio?

b. If it is less than 10%, what can the Bank do to bring in reserves?

Reference no: EM132249862

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