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The reserve requirement is 20% and Leroy deposits his $1,000 check he received as a graduation gift in his checking account. The bank does NOT want to hold excess reserves. Which of the following is an accurate description of the bank's balance sheet immediately after the deposit?A. Reserves increase by $1000, and demand deposits increase by $1000.B. Reserves increase by $1000, and demand deposits decrease by $1000.C. Reserves decrease by $1000, and demand deposits decrease by $1000.D. Reserves decrease by $200, and demand deposits increase by $1000.

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Answer:

A. Reserves increase by $1000, and demand deposits increase by $1000

Explanation:

Based on the information given the right description of the bank's balance sheet after the deposit is that the bank RESERVE will increase with the amount of $1,000 while the DEMAND DEPOSIT which is the deposit amount the customer can collect on demand on the other hand will as well increase with the amount of $1,000 reason been that the bank need RESERVE requirements because they need to have cash flow in their reserve in order to meet up with any liabilities that may arise due to customers withdrawal of fund.

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