Question

Suppose that a lottery winner deposits $20 million in cash into her transactions account at the...

Suppose that a lottery winner deposits $20 million in cash into her transactions account at the Bank of America.
Assume a reserve requirement of 30 percent and no excess reserves in the banking system prior to this deposit.
Show the changes on the Bank of America balance sheet when the $20 million is initially deposited.
BANK OF AMERICA
Assets Liabilities
Change in required reserves ? million Change in Deposits ? million
Change in excess reserves ? million
Change in total reserves ? million
0 0
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Answer #1

Solution:-

Changes in the balance sheet when $20 million is initially deposited-

Assets

Liabilities

Req. Reserves

60,00,000

Change in Deposits

20,000,000

Excess

140,00,000

Loans

( 0 )

Total

20,000,000

Total

20,000,000

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