The balance sheet below is that of the banking system in the country Macronesia. The...
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Accounting
The balance sheet below is that of the banking system in the country Macronesia. The reserve requirement is 10%.
ASSETS
LIABILITIES
Reserves:
Deposits $500,000
Required Reserves $50,000
Debt/Borrowing $50,000
Excess Reserves $100,000
Securities $250,000
Loans $300,000
TOTAL LIABILITIES $550,000
Shareholders Equity $150,000
TOTAL ASSETS $700,000
TOTAL LIABILITIES + SE $700,000
The central bank now decides to purchase $10,000 in securities. Complete the balance sheet below to show the change in the banking systems balance sheet. Assume that the banking system does not want to hold more than $100,000 in excess reserves at any time.
ASSETS
LIABILITIES
Reserves:
Deposits
Required Reserves
Debt/Borrowing
Excess Reserves
Securities
Loans
TOTAL LIABILITIES
Shareholders Equity
TOTAL ASSETS
TOTAL LIABILITIES + SE
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