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. $$\begin{array} { | l | r | l | r | } \hline{ \text { Assets } } & & { \text { Liabilities and equity } } & \\\hline \text { Cash required reserves } & 21 & \text { Demand deposits } & 550 \\\hline \text { Short-term securities } & 369 & \text { Interbank borrowed funds } & 151 \\\hline \text { Loans } & 400 & \text { Equity } & 89 \\\hline \text { Total } & 790 & \text { Total } & 790 \\\hline\end{array}$$ 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