Answer Happy

Question 11 (2 points) Suppose that TestBank has the following simplified balance sheet: Assets Reserves $4,000 Loans $16,000 Securities $20,000 Assume that the reserve ratio (r) = 0.2. $800 What is the maximum deposit outflow that TestBank can sustain without affecting other parts of the balance sheet? $4000 $720 $1000 $3200 Liabilities Demand deposits Time deposits Bank capital the money multiplier m will decline. $16,000 $14,000 ???????? Question 12 (2 points) Suppose that depositors and borrowers decide to hold more cash in the banking system. Then Oc will increase. All of the above. O bank reserves will decline. An increase in the monetary base will lead to a smaller increase in the money supply.