Question

The following information belongs to First and Second Banks: Bank A Reserves 10 Deposits 60 Loans 50 Bank Capital 10 Securities 10 Bank B: Reserves 15 Deposits 70 Bank Capital 5 Loans 50 Securities 10 List the above items in a T account Assume the desired reserve ratio is 10%. Calculate the desired and the excess reserves, if any, for both banks. A client withdrew 10 million from the second Bank. Show the changes in the T account of the Bank. Recalculate the desired and the excess reserves, if any. If there is a reserve deficiency what would the bank do?

          The following information belongs to First and Second Banks:
Bank A      
Reserves   10      
Deposits   60
Loans   50 
Bank Capital  10
Securities   10
Bank B:
Reserves   15
Deposits   70
Bank Capital 5
Loans    50
Securities   10
List the above items in a T account
Assume the desired reserve ratio is 10%. Calculate the desired and the excess reserves, if any, for both banks.
A client withdrew 10 million from the second Bank. Show the changes in the T account of the Bank. Recalculate the desired and the excess reserves, if any.
If there is a reserve deficiency what would the bank do?

Added by James S.

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