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ECON 201 Section 12

Handout 37-1 (20 Points)

T-Accounts

Work in pairs to complete the following exercises.

1.     Construct a general T-account for a bank.

2.     What must be true of the total values on each side of the T-account?

3.    The A&B Bank has $250,000 in deposits. If the reserve ratio is 10%, how much of these deposits must the bank hold in reserve?

4.     How much in loans can the A&B Bank issue in the given situation?

5.     Construct the T-account for the A&B Bank.