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Suppose there is one depositor who earns an income of $100 in each period.She spends $50 for consumption and the remainder goes to her savings account.Assume that a bank doesn't do anything with this money except safeguards it.The bank charges $5 for safeguarding fee.
-Suppose that there are now five depositors with the same pattern of income and consumption as in the original problem.There is a known fraction of 0.4 of the depositors who wish to withdraw at the end of the first period.The remaining depositors will withdraw at the end of the second period.What is the amount of money that the bank must have available at the end of the first period?
A)$50
B)$90
C)$150
D)$180
E)$225

Question

Use the following information for questions 
Suppose there is one depositor who earns an income of $100 in each period.She spends $50 for consumption and the remainder goes to her savings account.Assume that a bank doesn't do anything with this money except safeguards it.The bank charges $5 for safeguarding fee.
-Suppose that there are now five depositors with the same pattern of income and consumption as in the original problem.There is a known fraction of 0.4 of the depositors who wish to withdraw at the end of the first period.The remaining depositors will withdraw at the end of the second period.What is the amount of money that the bank must have available at the end of the first period?
A)$50
B)$90
C)$150
D)$180
E)$225

Quizplus · Accepted Answer

The Answer is B

Use the Following Information for Questions