Use the following balance sheet for the First Bank of Oz:
$\begin{array}{cc|}\text { Assets }&&\text { Liabilities }\
\hline\text { Required reserves } & \$ 15.00 &\text { Deposits }&\$100.00\
\text { Loans } & \$ 85.00
\end{array}$
If $1000 is deposited into the First Bank of Oz, then:
A)assets will increase by $1000
B)liabilities will decrease by $1000
C)total reserves will initially increase by $150
D)required reserves will increase by $850

Question

Quizplus · Accepted Answer

When $1000 is deposited into the First Bank of Oz, it becomes an asset for the bank in the form of a deposit. Therefore, assets will increase by $1000. Liabilities and total reserves will not be affected by this transaction, and required reserves will only be affected if the bank's deposits reach a certain threshold.

Use the Following Balance Sheet for the First Bank of Oz