Use the following bank transactions to develop the bank’s balance sheet. To start the bank, owners issue $500,000 in stock to shareholders. Next, they purchase $200,000 worth of equipment and office space to establish the physical location of the bank. Finally, they open the bank and receive $750,000 in check able deposits. With these reserves, they make $600,000 worth of loans.
What will be an ideal response?
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In the presence of asymmetric information, a hire contract
A) achieves production efficiency. B) can lead to opportunistic behavior on the part of the agent. C) is impossible to write. D) will result in the principal earning all of the profit.
Economist B believes that the economy can get stuck in a recessionary gap. This economist most likely believes that
A) wages and prices are flexible. B) wages and prices are inflexible downward. C) government may need to enact contractionary fiscal policy to move the economy out of a recessionary gap. D) the economy is self-regulating. E) none of the above
The short-run aggregate supply curve shows ________ while the long-run aggregate supply curve shows ________.
A. potential output; the current inflation rate B. the current inflation rate; potential output C. potential output; aggregate spending D. output; aggregate spending
"Subprime mortgages" refer to
A. mortgages made to borrowers who do not usually qualify for loans. B. interest rates that are over and above the prime rate to risky borrowers. C. mortgage brokers making huge commissions on volume. D. mortgages made to credit-worthy borrowers at low interest rates.