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Use the Information in This T-Account to Calculate This Bank's

question 20

Essay

Use the information in this T-account to calculate this bank's reserve ratio.Assume that the reserve requirement is 25%.Is this bank meeting this reserve requirement? Calculate the new reserve ratio if the loan recipients convert their checking account balances to cash and take the cash out of this bank.Is the bank still meeting its reserve requirement?
Assets
Liabilities
$50,000 (cash)
$50,000 (checking account balances)
$49,000 (loans)
$43,000 (loan recipients' checking account balances)


Definitions:

Business Credit

The ability of a business to obtain goods, services, or money based on the trust that payment will be made in the future.

Tolerance for Ambiguity

The ability of an individual to remain comfortable and continue to function effectively in situations that are uncertain, unknown, or unclear.

Internal Locus

A psychological attitude where an individual believes that they can control their life and outcomes rather than external forces.

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