1] Assume that the following asset values (in millions of dollars) exist in Ironmania:

Category	Value (Millions)
Federal Reserve Notes in circulation	$ 700
Money market mutual funds (MMMFs) held by individuals	400
Corporate bonds	300
Iron ore deposits	50
Currency in commercial banks	100
Savings deposits, including money market deposit accounts (MMDAs)	140
Checkable deposits	1,500
Small-denominated (less than $100,000) time deposits	100
Coins in circulation	40

Instructions:Enter your answers as a whole number.

a. What is M1 in Ironmania?

_________ $ million

b. What is M2 in Ironmania?

_________ $ million

2] The following balance sheet is for Big Bucks Bank. The reserve ratio is 20 percent.

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

Instructions: Enter your answers as a whole number.

a. What is the maximum amount of new loans that Big Bucks Bank can make?

_____________ $

Using the table above, show in columns 1 and 1' how the bank's balance sheet will appear after the bank has lent this additional amount by inserting the values into the gray shaded cells.

b. By how much has the money supply changed?

______________$

c. How will the bank's balance 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' by inserting the values into the gray shaded cells.

d. Using the originalfigures, revisit questions a, b, and c based on the assumption that the reserve ratio is 15 percent.

Assets		(3)	(4)	Liabilities and net worth		(3')	(4')
Reserves	$22,000			Checkable deposits	$100,000
Securities	38,000
Loans	40,000

What is the maximum amount of new loans that this bank can make?

____________$

Show in columns 3 and 3'how the bank's balance sheet will appear after the bank has lent this additional amount. Add values into the gray shaded cells of the table.

By how much has the money supply changed?

____________$