Please illustrate the following process using a T-account. 1) Situation A: Let’s say that Jane Brown has heard that the
Posted: Sun Jul 03, 2022 1:01 pm
Please illustrate the following process using a T-account.
1) Situation A: Let’s say that Jane Brown has heard that theFirst National Bank provides excellent service, so she opens achecking account with a $200 bill. Please show its T-account.
2) Situation B1: As you know, the bank is obliged to keep acertain fraction of its checkable deposits as required reserves. Ifthe fraction (the required reserve ratio) is 10% and the excessreserves the bank holds is $180. Please rewrite its T-account.
3) Situation B2: Suppose the banks wants to hold the $180as Loans (not excess reserves). Please rewrite its T-account.
4) Which one is more profitable, Situation B1 or SituationB2, why?
1) Situation A: Let’s say that Jane Brown has heard that theFirst National Bank provides excellent service, so she opens achecking account with a $200 bill. Please show its T-account.
2) Situation B1: As you know, the bank is obliged to keep acertain fraction of its checkable deposits as required reserves. Ifthe fraction (the required reserve ratio) is 10% and the excessreserves the bank holds is $180. Please rewrite its T-account.
3) Situation B2: Suppose the banks wants to hold the $180as Loans (not excess reserves). Please rewrite its T-account.
4) Which one is more profitable, Situation B1 or SituationB2, why?