Banks assets and liabilities

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Reference no: EM135702

Q1. Show how each of the following would initially affect a bank's assets and liabilities.

a. Someone makes a $10,000 deposit into a checking account.

b. A bank makes a loan of $1,000 by establishing a checking account for $1,000.

Q2. Suppose the money supply is currently $500 billion and the Fed wishes to increase it by $100 billion. Given a required reserve ratio of 0.25, what should it do? If it decided to change the money supply by changing the required reserve ratio, what change should it make?

Reference no: EM135702

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