Explanation The bank’s capital can be calculated by using the following formula: Capital = Assets − Laibilities (1) Since, the assets are $90 million and the liabilities are $71 million, the initial bank capital can be calculated by using the Eqution-1 as follows: Capital = $ 90 million − $ 71 million = $ 19 million Thus, the initial capital of the bank is $19 million. After the changes, the new assets are $99 million [ ( $ 90 × 10 % / 100 ) + $ 90 ] and the liabilities are $75

Identify the percentage change in bank's capital.

Macroeconomics

13th Edition

ISBN: 9781337617390

Author: Roger A. Arnold

Publisher: Cengage Learning

See similar textbooks

Question

Chapter 12, Problem 3WNG

To determine

Identify the percentage change in bank's capital.

Expert Solution & Answer

Similar questions

A bank has deposits of 400. It holds reserves of 50. It has purchased government bonds worth 70. It has made loans of 500. Set up a T-account balance sheet for the bank, with assets and liabilities, and calculate the banks net worth.

Recommended textbooks for you

Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Macroeconomics
Economics
ISBN:9781337617390
Author:Roger A. Arnold
Publisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:9781305971509
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning