9. The balance sheet below is for Big Bucks Bank. The reserve ratio is 20 percent. LO8

a. What is the maximum amoufn tn eow loans that Big Bucks Bank can make? Show in columns 1 and 1

how the bank’s balance sheet will appear after the bank has lent this additional amount.

b. By how much has the supplfy mooney changed?

c. How will the basn kb’ alance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank? Show the new balance sheet in columns 2 and 2.

d. Answer questions

a, b, and c on the assumption that the reserve ratio is 15 percent.

Transcribed Image Text:

Assets Liabilities and net worth (1) (2) (1) (2') Reserves $22,000 Checkable Securities 38,000 deposits $100,000 Loans 40,000