Consider the following balance sheet for the Wahoo Bank. Use it to answer the tw

Question

Consider the following balance sheet for the Wahoo Bank. Use it to answer the two questions that follow. Use a required reserve ratio of 10% and assume that the bank keeps no excess reserves.

1st attempt Part 1 (1 point)See Hint What will change on the balance sheet if Shantee withdraws $200 from her checking account?

Choose one or more:

A. Required reserves decrease by $200.

B. Outstanding liabilities increase by $200.

C. Required reserves decrease by $20.

D. Outstanding liabilities decrease by $200.

Part 2 (1 point)See Hint What will change on the bank's balance sheet if Francisco deposits $500 into his checking account?

Choose one or more:

A. Required reserves increase by $50.00.

B. Outstanding liabilities decrease by $500.

C. Outstanding liabilities increase by $500.

D. Required reserves increase by $500.

Wahoo Bank Balance Sheet Assets Liabilities and net worth Government $1,600 Liabilities: securities Required reserves Excess reserves Loans $400 $0 Checking deposits $4,000 $1,000 $3,000 Net worth Total assets $5,000

Explanation / Answer

PART 1

If Shantee withdraws $200 from her checking account then the checking deposits will decrease by $200.

Checking deposits are outstanding liabilities. So, these will decrease by $200.

Also, required reserves will decrease by ($200 * 0.10) $20.

Thus, the correct answer is the option (C) and (D).

PART 2

If Francisco deposits $500 into checking account then checking deposits will increase by $500.

Checking deposits are outstanding liabilities. So, these will increase by $500.

Also, required reserves will increase by ($500 * 0.10) $50.

Thus, the correct answer is the option (A) and (C).

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.