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What is the new level of deposits

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

Assets          $mn                                                                                      Liabilities             $mn

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Reserves                                    20                                          Deposits                             90

Loans                                           80                                          Share Capital                     10

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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: EM132256696

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