Reference no: EM132256696
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?