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3) Consider the balance sheet for the Wahoo bank as presentedbelow.

Wahoo Bank Balance Sheet

     

Assets

Liabilities

   

government securities

$1,600

Liabilities: Checking accounts

$4,000

Required Reserves

$400

Net Worth

$1,000

Excess Reserves

$0

 

 

Loans

$3,000

 

 

Total Assets

$5,000

Total Liabilities

$5,000

       

Using a required reserve ratio of 10% and assuming that the bankkeeps no excess reserves, write the changes to the balance sheetfor each of the following scenarios:

a. Bennett withdraws $200 from his checking account.

b. Roland deposits $500 into his checking account.

c. The Fed buys $1,000 in government securities from thebank.

d. The Fed sells $1,500 in government securities to thebank.

 

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