Northern Bank: Balance SheetAssetsLiabilitiesReservesLoans$780$15,220$16,000DepositsCapital$13,000$3,000$16,000Refer to the table above. Assume that Northern Bank's target reserve ratio is 8 percent. In order to achieve its target reserve ratio,Northern Bank mustand○ A. increase its reserves by $130; decrease its deposits by $130○ B. increase its reserves by $260; decrease its loans by $260○ C. increase its reserves by $260; decrease its deposits by $260OD. increase its reserves by $130; increase its loans by $260○ E. not change its reserves; not change its deposits

In this question we are given with the balance sheet of Northern Bank, and the bank has a target…

Northern Bank: Balance Sheet Assets Liabilities Reserves Loans $780 $15,220 $16,000 Deposits Capital $13,000 $3,000 $16,000 Refer to the table above. Assume that Northern Bank's target reserve ratio is 8 percent. In order to achieve its target reserve ratio, Northern Bank must and

Northern Bank: Balance Sheet Assets Liabilities Reserves Loans $780 $15,220 $16,000 Deposits Capital $13,000 $3,000 $16,000 Refer to the table above. Assume that Northern Bank's target reserve ratio is 8 percent. In order to achieve its target reserve ratio, Northern Bank must and

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter14: Banking And The Money Supply

Section: Chapter Questions

Problem 2.3P

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Question

Northern Bank: Balance Sheet
Assets
Liabilities
Reserves
Loans
$780
$15,220
$16,000
Deposits
Capital
$13,000
$3,000
$16,000
Refer to the table above. Assume that Northern Bank's target reserve ratio is 8 percent. In order to achieve its target reserve ratio,
Northern Bank must
and
○ A. increase its reserves by $130; decrease its deposits by $130
○ B. increase its reserves by $260; decrease its loans by $260
○ C. increase its reserves by $260; decrease its deposits by $260
OD. increase its reserves by $130; increase its loans by $260
○ E. not change its reserves; not change its deposits

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