Chapter 27 Worksheet

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ECON 222-B/222-C

Spring 2020

In-Class Worksheet:

Money and Banking

Complete each T-account. Show all balance sheet items in each step.

1. The bank sells $5 million in stock to the public.

Assets Liabilities + Bank Capital

2. The bank buys a physical structure for $1 million.

Assets Liabilities + Bank Capital

3. Depositors deposit $20 million in the bank.

Assets Liabilities + Bank Capital

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ECON 222-B/222-C
Spring 2020

4. The bank buys $20 million of government securities.

Assets Liabilities + Bank Capital

5. The bank grants $2 million in loans that borrowers withdraw immediately.

Assets Liabilities + Bank Capital

6. Depositors withdraw $0.5 million.

Assets Liabilities + Bank Capital

7. If the reserve requirement (RR) is 10%, then what is the bank’s situation due to these
transactions and how might the bank respond?

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