Use the Following Balance Sheet (Values in Thousands of Dollars)

Multiple Choice

Use the following balance sheet (values in thousands of dollars) to answer the question. Assets
Liabilities and equity
Cash required reserves
21
Demand deposits
550
Short-term securities
369
Interbank borrowed funds
151
Loans
400
Equity
89
Total
790
Total
790
If the bank experiences a $50 000 sudden liquidity drain caused by withdrawal of their demand deposits, what will be the impact on the balance sheet if purchased liquidity management techniques are used?

A) A reduction in cash of $21 000 and a decrease in demand deposits of $29 000.
B) A reduction in securities and/or current loans totalling $50 000.
C) A reduction in demand deposits of $50 000 and an increase in interbank borrowings of $50 000.
D) A decrease in equity of $50 000.