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Author Question: The Second National Bank of Townville has 400,000 in checking deposits, 125,000 in savings deposits, ... (Read 103 times)

xroflmao

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on: Jun 29, 2018
The Second National Bank of Townville has 400,000 in checking deposits, 125,000 in savings deposits, 500,000 in loans, 20,000 in its reserve account at the Fed, and 5,000 of currency in its vault. What is the amount of its reserves?
 
  What will be an ideal response?

Question 2

Refer to the scenario above. In equilibrium, Beth's payoff is ________.
 
  A) 10
  B) 0
  C) 20
  D) 50


wshriver

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Reserves include the bank's deposit in its reserve account at the Fed and the currency in its vault. Therefore the Second National Bank of Townville has 20,000 + 5,000 = 25,000 in reserves.

Answer to Question 2

A


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