Assets: Required reserves $1,000; Excess reserves $1,000; Customer loans $10,000; Government bonds $5,000; Cash (unspecified). Liabilities: Demand deposits $9,000. Reserve ratio remains 10%.
Let's analyze the changes to the balance sheet after Lindsey withdraws $1,000 in cash from Bank of 'Merica.
Before the withdrawal:
Assets:
Required reserves: $1,000
Excess reserves: $2,000
Customer loans: $10,000
Government bonds: $5,000
Total Assets: $18,000
Liabilities:
Demand deposits: $10,000
Owner's equity: Not specified in the provided information.
After Lindsey withdraws $1,000 in cash:
Assets:
Required reserves: Remains the same at $1,000
Excess reserves: Decreases by $1,000 to $1,000
Customer loans: Remains the same at $10,000
Government bonds: Remains the same at $5,000
Cash: Decreases by $1,000 to an unspecified amount
Total Assets: Decreases by $1,000 from the original total
Liabilities:
Demand deposits: Decreases by $1,000 to $9,000
Owner's equity: Not specified in the provided information.
Now, let's answer the questions:
The reserve ratio: The reserve ratio is the ratio of required reserves to demand deposits. Before the withdrawal, the reserve ratio is 1,000 / 10,000 = 0.1 or 10%. After the withdrawal, the reserve ratio remains the same since the required reserves and demand deposits both decrease by $1,000.
Government bonds: The amount of government bonds remains unchanged at $5,000 after the withdrawal.
Demand deposits: After the withdrawal, demand deposits decrease by $1,000 to $9,000.
Required reserves: The amount of required reserves remains the same at $1,000 after the withdrawal.
Excess reserves: Excess reserves decrease by $1,000 to $1,000 after the withdrawal.