Table 29-3.
The First Bank of Johnson City

-Refer to Table 29-3.If $1,000 is deposited into the First Bank of Johnson City,and the bank takes no other actions,its
A) reserves will increase by $200.
B) liabilities will decrease by $1,000.
C) assets will increase by $1,000.
D) reserves will increase by $800.

Question

Table 29-3.
The First Bank of Johnson City
 
-Refer to Table 29-3.If $1,000 is deposited into the First Bank of Johnson City,and the bank takes no other actions,its
A) reserves will increase by $200. 
B) liabilities will decrease by $1,000. 
C) assets will increase by $1,000. 
D) reserves will increase by $800.

Quizplus · Accepted Answer

When $1,000 is deposited into the First Bank of Johnson City, the bank's assets will increase by $1,000. The deposited amount becomes a part of the bank's reserves, which are included in its assets. Therefore, choice C is correct. Choice A is incorrect because the deposit amount is not related to a change in the bank's reserve requirement percentage. Choice B is incorrect because the deposit does not lead to a decrease in the bank's liabilities. Choice D is incorrect because the deposit amount does not relate to an increase in the required reserves by the Federal Reserve.

Table 29-3. The First Bank of Johnson City