Use the information presented in Southwestern Mutual Bank's balance sheet to answer the following questions.
Assets Liabilities and Owners' Equity
Reserves $200 Deposits $675
Loans $800 Debt $250
Securities $1,000 Capital (owners'equity) $1,075
Requried:
1. Suppose a new customer adds $100 to his account at Midwestern Mutual Bank, which the owners of the bank then use to make $100 worth of new loans.
a. This would increase the loans account and the deposits account.
b. This would also bring the leverage ratio from its initial value of to a new value of .
2. Which of the following do bankers take into account when determining how to allocate their assets? Check all that apply.
a. The size of the monetary base.
b. The total value of liabilities.
c. The reserve requirement.
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Use the information presented in Southwestern Mutual Bank's balance sheet to answer the following qu...
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