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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