Question

Banker’s T Checking accounts = $1,200. Savings accounts = $2,000 Loans = $1,200 Bonds = $2,100...

Banker’s T

Checking accounts = $1,200.

Savings accounts = $2,000

Loans = $1,200

Bonds = $2,100

Accounts Receivable = $50

Physical capital = $400

Accounts payable = $100

Borrowing from other banks = $600

The required reserve ratio on checking is 10%, on savings it’s 0%.

a) How big a loss in the value of loans would it take to make this bank insolvent?

b) How much does this bank hold in excess reserves?  

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