Suppose there is a 10% reserve requirement, and the bank has the following Balance Sheet Reserves Loans Securities Assets 55 M 250 M 45 M Deposits Bank Capital Liabilities 350 M 50 M Now, let's suppose there is a deposit outflow of $60 million. If the bank only finances its reserve shortages by borrowing from the Federal Reserve, show the bank's balance sheet after the deposit outflow and receiving the loan from the Fed.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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D1.

Please redraw the balanced T-account. 

 

 

 

Suppose there is a 10% reserve requirement, and the bank has the following Balance Sheet
Reserves
Loans
Securities
Assets
55 M
250 M
45 M
Deposits
Bank Capital
Liabilities
350 M
50 M
Now, let's suppose there is a deposit outflow of $60 million. If the bank only finances its reserve
shortages by borrowing from the Federal Reserve, show the bank's balance sheet after the deposit
outflow and receiving the loan from the Fed.
Transcribed Image Text:Suppose there is a 10% reserve requirement, and the bank has the following Balance Sheet Reserves Loans Securities Assets 55 M 250 M 45 M Deposits Bank Capital Liabilities 350 M 50 M Now, let's suppose there is a deposit outflow of $60 million. If the bank only finances its reserve shortages by borrowing from the Federal Reserve, show the bank's balance sheet after the deposit outflow and receiving the loan from the Fed.
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