Business, 16.04.2021 17:20 aallyssabrown0120

Beleaguered State Bank (BSB) holds $500 million in deposits and maintains a reserve ratio of 20 percent. Complete the following T-account for BSB. Beleaguered State Bank
Assets Liabilities
Reserves million Deposits million
Loans million

Now suppose that BSB's largest depositor withdraws $25 million in cash from her account. BSB decides to restore its reserve ratio by reducing the amount of loans outstanding.

Complete BSB's new T-account after it has taken this action.

Beleaguered State Bank
Assets Liabilities
Reserves million Deposits million
Loans million

Because BSB is cutting back on its loans, other banks will find they have reserves, causing them to their loans. Which of the following ways represent an alternative for BSB to return to its original reserve ratio? Check all that apply.

a. Lend money
b. Borrow money from another bank
c. Borrow money from the Fed
d. Attract additional deposits

Answers: 2

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Beleaguered State Bank (BSB) holds $500 million in deposits and maintains a reserve ratio of 20 perc...

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