Answer:
1. What will change on the balance sheet if Shantee withdraws $200 from her checking account?
Reserved Ratio = 10% = 200 * 10% = 20
Since Shantee withdraws 200$, The balance of the checking deposits on the liability side will reduce by $200, leaving a balance of $3800.
Under assets, the required reserves will be reduced by 20 leaving a new value of $380 and the loans will be reduced by $180 to $2820.
So the correct answers are:
C. Required reserves decrease by $20
D. Outstanding liabilities decrease by $200.
2. What will change on the bank's balance sheet if Francisco deposits $500 into his checking account?
Reserved Ratio = 10% = 500 * 10% = 50
Checking deposits will be increase by $500 for a total of $4500. Required Reserve will increase by 50 to $450.
So the correct answers are:
A. Required reserves increase by $50.00.
C. Outstanding liabilities increase by $500.
